Moneycontrol
Last Updated : May 07, 2018 05:19 PM IST | Source: Moneycontrol.com

Buy Hindustan Zinc; target of Rs 350: ICICI Direct

ICICI Direct is bullish on Hindustan Zinc has recommended buy rating on the stock with a target price of Rs 350 in its research report dated May 02, 2018.

Broker Research @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

ICICI Direct's research report on Hindustan Zinc


Hindustan Zinc reported a healthy set of Q4FY18 numbers. The performance was above our estimates. HZL reported operating income of   6277 crore (up 0.3% YoY, 6.0% QoQ, vs. our estimate of  6151 crore). Zinc sales volume for the quarter came in at ~210000 tonnes (down 3.2% YoY, up 5% QoQ, in-line with our estimate of ~210000 tonnes). Lead sales volumes came in at ~50000 tonnes (up 6.4% YoY, 8.7% QoQ, higher than our estimate of ~47000 tonnes). While the silver sales came in at ~167000 kg (up 23.7% YoY, 26.5% QoQ, vs. our estimate of ~135000 kg). The reported EBITDA margin came in at 57.7% (our estimate: 54.3%, Q3FY18: 54.8% and Q4FY17: 59.9%). The reported EBITDA stood at  3620 crore (down 3.4% YoY, up 11.6% QoQ, higher than our estimate of  3342 crore). The zinc metal cost of production per tonne before royalty (COP) during the quarter declined by 9.9% QoQ to   59569/tonne (US$925/tonne), which aided margin expansion. HZL reported an other income of   486 crore up 1% YoY, 63.1% QoQ (our estimate:   350 crore), exceptional item (expense) of  51 crore related to gratuity provision for earlier years. The resultant PAT stood at   2505 crore (down 18.1% YoY, up 12.3% QoQ).


Outlook


Hindustan Zinc reported a healthy set of Q4FY18 numbers primarily on account of a sharp sequential decline in zinc cost of production. For FY19E, the management has guided a slightly higher mined metal production for zinc-lead, while the silver production is guided at 650-700 tonnes. Going forward, we expect the topline and EBITDA to clock a CAGR of 11% and 15%, respectively, during FY18-20E. We continue to value the stock at 7x FY20E EV/EBITDA and arrive at a target price of   350. We maintain our BUY recommendation.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on May 7, 2018 05:19 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant