The Hindu Business Line : Hind Zinc gleams on firming metal prices

Brokers said the current interest in the counter was in tune with the sectoral interest in the market. ``So many non-ferrous, ferrous stocks were beaten down in line with the then prevailing market sentiment. But with the firming up of prices globally, these stocks are back on the market radar,'' a dealer said.

``Zinc prices shot up by $32 per tonne on Thursday and is ruling at around $1120 per tonne on the LME. Currently there is a demand-supply mismatch of around 1,50,000 tonnes of zinc in the country. HZL is the cheapest zinc producer in the country. And with the current boom in the steel industry, demand for zinc is expected to keep ramping up for another two years,'' says Mr Hanu Bhatia, Vice-President, of Parag Parikh Securities.

HZL is the largest zinc producer in the country meeting two-thirds of the country's requirements. It is an integrated player having its own mines and smelters. It has commenced brown-field expansion plan by installing a 1,70,000 mt zinc smelter with mining capacities and a captive power plant of 150 MW. This is scheduled for completion by the year 2005 and is expected to not only double its zinc capacity but also bring down its power costs by half. The Sterlite group currently holds around 65 per cent of the equity.

``For the current fiscal, the company is quoting at an EPS of Rs 12-13. For the next fiscal, we are looking at an EPS of Rs 20-21. With the share trading at 5PE, it is far cheaper than other metal majors,'' added Mr Bhatia.

According to analyst Mr Anant Katare of Khandwala Securities, the market is taking a re-look at all metal stocks. ``With concerns such as demand from China likely to taper off, behind them and no threat of additional capacity coming up in the next 18 months, there is renewed interest in the stock. From these levels one can expect a 25-30 per cent appreciation over the next eight months,'' he said.

The stock ended the day at Rs 106.35 up 4.68 per cent with around 3.9 lakh shares traded on the BSE.

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