Neutral Hindustan Zinc; target of Rs 460: Motilal Oswal

Motilal Oswal's research report on Hindustan Zinc

Hindustan Zinc (HZ)’s revenue was INR86b (YoY/QoQ: +18%/+4%) vs. our estimate of INR82b. The growth was largely on account of higher zinc and silver prices and a strong dollar, marginally offset by lower metal volumes. EBITDA stood at INR45b (YoY/QoQ: +28%/+9%) against our estimate of INR41b, led by higher revenues and lower-than-expected cost of production (COP). EBITDA margin came in at 52.2% vs. 50% in 2QFY25. Zinc’s COP for 3QFY25 stood at USD1,041/t (INR 87,960/t), -5% YoY and -3% QoQ. The improvement was led by higher metal grades and better domestic coal availability with lower costs, which were further supported by increased renewable energy and higher acid realizations.

Outlook

We reiterate our Neutral rating with a TP of INR460 (premised on 8x EV/EBITDA on FY27 estimates).