Reduce Hindustan Zinc; target of Rs 258: Geojit

Geojit's research report on Hindustan Zinc

Hindustan Zinc Limited specialises in the exploration, mining and smelting of zinc, lead and other non-ferrous metals. The company’s products include zinc ore, lead zinc concentrate, zinc metal, lead metal, cadmium metal, silver metal and sulphuric acid. In Q2FY24, the company reported a drop of 18.5% YoY in revenue to Rs. 6,620cr, primarily due to lower zinc prices and reduced zinc and silver volumes. Despite cost improvements, lower revenue affected margins, leading to a contraction of 680 bps YoY in EBITDA margin to 47.4%. Consequently, reported PAT declined 35.2% to Rs. 1,737cr. Macroeconomic uncertainties and potential challenges, such as weakened Chinese economy, increasing inflation and rising interest rates, are likely to impact the near-term outlook.

Outlook

Hence, we reiterate our REDUCE rating on the stock with a revised target price of Rs. 258 based on 6.7x FY25E EV/EBITDA.

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