Hindustan Zinc Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Hindustan Zinc reported a healthy set of Q2FY18 numbers. The EBITDA was broadly in line with our estimate. PAT came in higher than our estimate on account of exceptional gains HZL reported an operating income of | 5309 crore (up 50.6% YoY, 16% QoQ, broadly in line with our estimate of | 5442.5 crore). Zinc sales volume for the quarter were at ~193000 tonnes (up 30.4% YoY, 1.6% QoQ, broadly in line with our estimate of ~190000 tonnes). Lead...

The stock, after a recent run-up, is fairly priced in our view (FY18/19 EV/ EBITDA of 10.1/8.6. Downgrade to NEU with an unchanged TP of Rs 340 (8x Sep-2019 EV/EBITDA). Hindustan Zinc Ltds (HZL) numbers came in marginally lower than estimates (EBITDA: Rs 30.2bn, 45.6/26.8% YoY/QoQ, est Rs 31.1bn). The improvement in EBITDA is driven by higher zinc prices (31.4/14.1% YoY/QoQ), partially offset by higher Zn cost of production (USD984/t, 21.6/1.1% YoY/QoQ). Silver (146T, 35.2/27.0% YoY/QoQ) also contributed significantly to the jump (18% of PBIT in 2QFY18).

Zinc market remains tight even as demand growth is modest on lag in supply response. Thus, the price outlook remains bullish. At zinc LME of USD3,400/t for FY19E, the stock is trading at 6.4x EV/EBITDA, leaving limited upside potential. Maintain Neutral with a TP of INR322/sh. based on 6.5x FY19E EV/EBITDA....

Upgrade to BUY with a TP of Rs 340 (8.0x September 2019 EBITDA). We visited Hindustan Zinc (HZL) operations (Sindesar Khurd (SK) Mine and Dariba smelter) and interacted with the management for Vedanta Zinc Day. Our key takeaways of the visit are (1) SK mine on track to help deliver 1.2 mTPA by 2020; (2) Near doubling of silver production potential from ~500 T to 1,000T and (3) Strong R&R;/exploration inventory to fuel the next phase (1.5 mTPA), possibly with additional silver beyond 1000T.

Hindustan Zinc's (HZL) Q1FY18 EBITDA at Rs 24 bn (up 111% YoY) was lower than our and consensus estimates. The YoY improvement in performance was led primarily by (1) substantial ramp-up in production from Rampura Agucha open cast mine as per the mine plan; (2) higher LME prices; and (3) stron..

We remain constructive, except for valuations (9.2/7.7x FY18/19 EBITDA). Maintain NEU with a TP of Rs 270 (7x June-2019 EV/EBITDA). Hindustan Zinc Ltds (HZL) numbers came in marginally lower than estimates (EBITDA: Rs 23.8bn, 2.1x YoY, -36.0% QoQ, est Rs 25.3bn). Zinc cost of production increased to USD973/t (vs run-rate of USD800), led by higher coal prices driving the miss. HZL changed its depreciation policy to WDV, and the resulting lower depreciation drove the earnings beat (Rs 18.7bn, 80.8% YoY, 381% QoQ).

The company reported a gross operating income of | 5013 crore. After adjusting for excise duty, net operating income came in at | 4576 crore (up 80.8% YoY, down 26.9% QoQ against our estimate of | 4850.5 crore). Zinc sales volume for the quarter came in at ~190000 tonnes (up 58.3% YoY, down 12.4% QoQ, lower than our estimate of ~207000 tonnes). Lead sales volumes came in at ~34000 tonnes (up 47.8% YoY, down 27.7% QoQ, higher than our estimate of 33500 tonnes). Silver sales volumes came in at ~110000 kg (up 25% YoY,...

Hindustan Zinc has delivered a muted performance in 1QFY18 with its EBITDA declining by 36.4% QoQ to Rs23.84bn vs. our estimate of Rs25.61bn largely due to higher than expected input cost. Further, lower mined metal production, lower LME prices and appreciation of the INR against the Greenback dragged its operating profit following the best ever quarterly performance in 4QFY17 owing to sale of zinc concentrate to the tune of 26kt. Broadly in-line with our estimate of 197,000 tonne, Zinc volume rose by 92% YoY (-10% QoQ) to 194,000 tonne. Lead volumes surged by 40% YoY (-22% QoQ) to 35,000 tonne marginally missing our estimate of 37,000 tonne. PAT increased by 81% YoY and fell 39% QoQ to Rs18.76bn vs. our estimate Rs19.54bn. With mine transition...

ICICI Securities Ltd | Retail Equity Research According to preliminary data recently compiled by ILZSG, the global market for refined zinc metal was in deficit by 6 KT over the first quarter of 2017 (against the surplus of 3 KT in Q1CY16) with total reported inventories declining by 18 KT over the same period. Refined zinc metal production during the quarter was at 3406 KT against metal usage of 3412 KT, implying the aforementioned deficit. In April 2017, the ILZSG forecast for CY17 suggests the deficit in refined zinc metal market is likely to...

We roll over HZL's target price to FY19 and value the company at 6x EV/EBITDA. Our revised target price stands at Rs 269 (5% downside from CMP of Rs 283) with HOLDrating (due to rollover; SELL earlier).We revise our EPS estimates for FY18/19 to Rs 25/28 (Rs 26/36 earlier) mainly due to reduction i..