Motilal Oswal's research report on Hindustan Zinc
Hindustan Zinc (HZ)’s 3QFY24 revenue stood at INR73b (down 7% YoY), in line with our estimate of INR75b. EBITDA stood at INR35b (down 5% YoY), in line with our estimate of INR34b. The YoY decline in EBITDA was due to lower zinc sales volumes, lower zinc ASP, higher marketing cost and strategic hedging impact, partially offset by increased silver/lead volumes, reduction in CoP, and favorable exchange rates. The CoP stood at USD1,095/t (the lowest CoP in the last 10 quarters and the fourth consecutive quarter of consistent improvement). The reduction in CoP is driven by better volumes, enhanced operational efficiencies, and the benefits of lower coal prices. APAT stood at INR20b (down 6% YoY), above our estimate of INR18b. APAT was higher on the back of higher ‘other income’ and lower-than-expected tax outgo. HZ declared a second Interim dividend of INR6 per share in Dec 2023.
Outlook
HZ currently trades at 6.7x FY26E EV/EBITDA and we believe all positives are priced in at current levels. We reiterate our Neutral rating on the stock with a TP of INR310 (premised on 6x FY26E EV/EBITDA).
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