Neutral Hindustan Zinc; target of Rs 215: Motilal Oswal
Motilal Oswal recommended Neutral rating on Hindustan Zinc with a target price of Rs 215 in its research report dated October 20, 2020.
Oct 21, 2020 / 02:42 PM IST
Motilal Oswal 's research report on Hindustan Zinc
Hindustan Zinc (HZ)’s 2QFY21 result was strong, as expected, led by higher silver volumes and prices. Silver EBIT was the highest ever at INR10.8b (+117% YoY; +103% QoQ), contributing 46% to overall EBIT (the second highest ever). HZ declared interim dividend of INR21.3/sh, amounting to INR90b (~50% of net cash balance) and implying a dividend yield of ~10%. Volume ramp-up, however, has been lagging guidance. Moreover, the pledging of shareholding by promoter Vedanta Ltd is an additional overhang on the stock. Maintain Neutral.
We thus remain Neutral, with TP of INR215/share, based on 6.0x FY22E EV/EBITDA. The stock trades at 6.3x FY22E EV/EBITDA, which we believe prices in the attractive dividend yield.
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