Neutral Hindustan Zinc; target of Rs 570: Motilal Oswal

Motilal Oswal's research report on Hindustan Zinc

In 2QFY25, revenue stood at INR83b (+22% YoY/+2% QoQ) against our estimate of INR78b. The YoY growth was driven by better metal and silver volumes and zinc and silver prices, further supported by a strong dollar and marginally offset by lower lead prices. EBITDA stood at INR41b (+31% YoY/+5% QoQ) against our estimate of INR39b. EBITDA margin came in at 50% vs. 48.5% in 1QFY25. Zinc cost of production (COP) for 2QFY25 stood at USD1,071 (INR89,686) per MT (-5% YoY and -3% QoQ). The improvement was due to higher volume and better linkage coal availability, further supported by softened coal and input commodity prices and operational efficiencies.

Outlook

We maintain our Neutral rating on the stock with a TP of INR570 (premised on 10x EV/EBITDA on FY27 estimates).