Neutral Hindustan Zinc; target of Rs 290: Motilal Oswal

Motilal Oswal recommended Neutral rating on Hindustan Zinc with a target price of Rs 290 in its research report dated October 21, 2023.

Broker Research

October 23, 2023 / 12:58 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Hindustan Zinc

Hindustan Zinc (HZ)’s 2QFY24 revenue came in at INR68b (down 19% YoY), which was in line with our estimate of INR67b. EBITDA stood at INR31b (down 29% YoY), in line with our estimate of INR32b. The decline in EBITDA was attributed to lower LME prices, lower volumes, and strategic hedging impact, which were partially offset by lower cost of production (CoP) and favorable exchange rates. The CoP stood at USD1,137/t (the lowest CoP in the last five quarters). The reduction in CoP is driven by better coal linkage availability, softening of input costs, and better ore grades. APAT stood at INR17b (down 35% YoY), in line with our estimate of INR18b. Refined zinc sales for 2QFY24 stood at 185kt (down 2% YoY), refined lead sales came in at 57kt (flat YoY), and silver sales stood at 181t (down 7% YoY). 1HFY24 revenue stood at INR141b (down 21% YoY) and EBITDA stood at INR65b (down 32% YoY). HZ posted the highest ever 1H mined metal production of 509kt, aided by higher ore production at Rampura Agucha mines and improved metal grades.

Outlook

HZ is currently trading at a rich valuation of 6.7x FY25E EV/EBITDA and 5.6x FY25E P/B. We retain our estimates for FY24 and FY25 and reiterate our Neutral rating on the stock with a TP of INR290 (premised on 6x FY25E EV/EBITDA).

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