Comments
Target: ₹298
CMP:₹331.40
Hindustan Zinc Ltd 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 sulfuric acid.
Hindustan Zinc Limited reported a 2.7-per cent decrease in revenue in Q3FY23 at ₹7,628 crore. Mined metal production for the company was the highest during nine months ending FY2023. It increased by 5.4 per cent y-o-y; similarly refined metal increased by 7.9 per cent y-o-y.
Increased commodity prices impacted margins. EBITDA margin contracted by about 710 bps y-o-y to 48.6 per cent due to higher costs. Consequently, the company reported a 20.1 per cent decrease (y-o-y) in PAT in Q3FY23 at ₹2,157 crore.
Global uncertainties including inflationary pressures and supply constraints are expected to impact profit margins in the near term. In addition, the International Monetary Fund (IMF) projections forecast sluggish growth for most of the major economies in 2023 with a gradual recovery in 2024.
Hence, we remain cautious over the company’s growth prospects despite the anticipated increase in demand for zinc and lead. We, thus reiterate our rating on the stock to Reduce, with a revised target price of ₹298 based on 6.2x FY25 EV/EBITDA.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.