Neutral Hindustan Zinc; target of Rs 490: Motilal Oswal

Motilal Oswal's research report on Hindustan Zinc

Hindustan Zinc’s (HZ) 4QFY24 revenue stood at INR75b (down 11% YoY) vs. our est. of INR80b. The sequential revenue growth was driven by better zinc volumes, which offset lower lead & silver volumes and lower metal prices. EBITDA stood at INR36b (-14% YoY/+4% QoQ), in line with our est. of INR36b. EBITDA margin was flat QoQ at 48.3% (vs. our est. of 45%). EBITDA declined YoY, mainly on account of lower revenue, which was partly offset by cost improvement.

Outlook

The performance has been largely in line with our estimates. The company continues to focus on improving production with tight cost control. To account for lower CoP ahead and an improved demand outlook, we have increased our FY25/FY26 EBITDA estimates by 11%/10%. HZ currently trades at 7x FY26E EV/EBITDA and we believe all positive factors are priced in at the current levels. We reiterate our Neutral rating on the stock with a revised TP of INR370 (premised on 6.5x FY26E EV/EBITDA).