Hold Hindustan Zinc; target of Rs 235: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Hindustan Zinc

Hindustan Zinc (HZ) reported earnings 5% below our estimates due to lower volumes. However, earnings beat consensus estimates by 4%. HZ missed its guidance on volumes and ore grade over past couple of years due to delay in commissioning of shafts and weaker than assessed ore grade. As the new shafts at both Rampura Agucha (RA) and Sindesar Khurd (SK) mines commenced hauling of ore, we expect improvement in quality of operations with better visibility on production and costs. In last five years, ore grade has fallen by ~30% to 7.5% due to fall in grade and share of RA mines. However, we believe that ore grade has bottomed out at current levels. Due to run-up in stock price and unattractive valuations, we downgrade the stock to Hold with TP of Rs235 based on EV/EBITDA of 5x FY22e. 

Outlook

However, we believe that ore grade has bottomed out at current levels. Due to run-up in stock price and unattractive valuations, we downgrade the stock to Hold with TP of Rs235 based on EV/EBITDA of 5x FY22e.

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