Hindustan Zinc Ltd. share price target

Healthy reserve base to provide earnings visibility HZL has a huge reserve base, which provides strong earnings visibility. During the year, gross additions of 5.4 million tonnes (MT) were made to reserve and resource (R&R;), prior to depletion of 13.8 MT. As on March 31, 2019, the combined R&R; were estimated to be 403 MT, containing 34.6 MT of zinc-lead metal and 965 million ounces of silver. HZL's overall mine life...

19 July 2019 EBITDA of INR24.8b (-11% QoQ/-9% YoY) came in line with our estimate of INR24.5b, as the impact from lower metal volumes (-6% QoQ) was offset by higher-than-expected zinc premiums. PAT declined 12% QoQ/8%YoY to INR17.7b. Management expects SKs production to improve with the commissioning of the paste fill plant (Jun19). Reported CoP increased USD80/t QoQ to USD1,067/t due to lower volumes and higher power cost. However, HZ expects CoP to decline amid normalization of power cost, volume-led benefit and lower coal costs. While the zinc market remains in deficit, factors such as (a) demand concerns due to ongoing trade war/weakening global demand and (b) anticipated higher supply have led to a fall in LME zinc prices to ~USD2,480 zinc LME estimate to INR2,600. We expect mine production CAGR of 8% over FY19-21 and CoP to decline as shafts commission at RA and SKM.

Hindustan Zinc (HZL) reported a healthy Q4FY19 performance. For the quarter, better-than-expected sales volume of zinc and silver vertical aided the overall performance. Zinc sales volume came in at ~177000 tonnes (our estimate: 170000 tonnes), Lead sales volume came in at ~52000 tonnes (our estimate: 55000 tonnes) while silver sales volume came in at ~199000 kg (our estimate: 189000 kg). Topline came in at | 5491 crore (higher than our estimate of | 5220.3 crore). EBITDA came in at | 2789 crore (higher than our estimate of | 2647.2 crore). EBITDA margin came in at 50.8%( our estimate:...

2 May 2019 Hindustan Zinc (HZL)s 4QFY19 EBITDA at INR27.9b (-1% QoQ) came in 8% higher vs. our estimate led by higher silver yield, higher by-product revenue and better zinc premium. Other income stood at INR5.4b (-2% QoQ; +48% vs. PAT decreased 9% QoQ to INR20b (+4% vs. For FY19, EBITDA stood at INR107b (-13% YoY) with PAT at INR80b (-11% YoY). Mine production was 1% lower QoQ (-4% YoY) due to geological challenges in Jan & Feb. Refined metal production declined 6% QoQ. Sales of zinc decreased 5% QoQ to 177kt, while lead declined 4% QoQ to 52kt. Sales of silver though rose 12% QoQ to 199t indicating higher yield. Reported cost of production (CoP) declined USD10/t QoQ to USD987/t on higher coal linkage materialization and lower diesel costs, partly offset by higher mine development expenses. Zinc market is still tight despite muted demand growth.

Hindustan Zinc (HZ) reported Q4FY19 earnings marginally above our Change in Estimates | Target | Reco despite lower volumes. However, grade mix slippages by 50-95bps remains a...

Zinc sales volume for the quarter was at ~187000 tonne, up 17% QoQ, down 6% YoY, higher than our estimate of 180031 tonne. Lead volumes were at ~54000 tonne, up 17% YoY, 10% QoQ, broadly in line with our estimate of 54575 tonne, while silver volumes were at ~178000 kg, up 35% YoY, 11% QoQ higher than our estimate of 169183 kg. HZL reported an operating income of | 5540 crore, down 6% YoY, up 16% QoQ, higher than our estimate of | 5304.5 crore Reported EBITDA margin was at 51.2%, broadly in line with our...

21 January 2019 EBITDA increased 22% QoQ to INR28.4b (in-line) in 3QFY19, led by higher volumes and a 4% rise in zinc LME. Other income grew 40% QoQ to INR5.5b, driven by mark-to-market gains. PAT rose 22% QoQ to INR22.1b (in-line). Mine production increased 6% QoQ (3% YoY), while refined metal production rose 15% QoQ, led by higher concentrate availability. Zinc/lead/silver sales increased 17%/10%/11% QoQ to 187kt/54kt/178t. Reported cost of production (CoP) declined USD37/t QoQ to USD997/t owing to higher volumes and lower diesel cost, partly offset by higher mine development expenses. CoP is guided to decline by ~USD50-100/t in 4Q, given higher linkage coal availability and volumes. Capex guidance is lowered to USD350m from USD400m due to delays in a few projects. Mine production capacity is expected to reach 1.2mt by end-FY19. RA mine shaft commissioning is delayed by a few quarters to 2QFY20, while SK mine shaft is expected to commission soon.

Volumes, cost of production to improve in H2FY19... The management has reiterated its guidance of slightly higher overall production for FY19 (vs. FY18) on the back of a continued ramp up of its underground mines. The company is aiming to cross 1 million tonne per annum (MTPA) mined metal production run-rate by Q4FY19. Thus, production volumes are likely to be significantly higher in H2FY19 vs. H1FY19 (H1FY19 mined metal production was at 444 KT). On the cost front, the management has indicated at a ramp up in production volumes...

We downgrade Hindustan Zinc (HZL) to Hold with a revised TP of Rs275 as weakening price outlook for LME Zn/Pb led by sharp increase in mining output globally is likely to result in a balanced zinc market in CY19 thereby reversing the deficit position seen since CY16. We like HZL for its attractive asset base, growing volumes but see earnings growth remaining muted with lower LME realisations. Valuations appear rich on the revised lower earnings and don't leave much room for any disappointments on volume/cost front. Metal volumes subdued due to mismatch in MIC availability: MIC production...

Hindustan Zinc reported an EBITDA of INR 23.3bn, in-line with JMFe. EBITDA declined 23% YoY, driven by lower zinc volumes (17% YoY) and higher CoP. Zinc volumes declined, driven by transition to underground mining leading to lower grades and higher strip ratio. CoP increased YoY, driven by lower zinc volumes, higher thermal coal costs and INR depreciation. Near term zinc price outlook remains steady, driven by a) ILZSG deficit forecast of 322kt in CY18 and b) multi-year low warehouse inventory (224kt of LME+SHFE inventory). The company has declared a strong interim dividend of INR 20/sh (div. yield of 7.1%). We remain positive on HZL given its presence in the lower end of the global cost curve facilitated by high...