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Emkay Global
Hindustan Zinc (Hold)
CMP: ₹209.9
Target: ₹220
Hindustan Zinc delivered in-line but weak set of results due to delayed projects commissioning. Ore hauling from RA mines, backfill paste plants at Zawar, Fumer at Chanderiya commissioning are delayed to Feb-20 vis-à-vis Q3FY20 previously.
Aggressive mine development, setting up minor metals extraction plant and 0.7 million tonne fertiliser plant should deliver incremental EBITDA from FY22E, in our view, but expect cash burn in initial years reducing cash balance from previous estimates.
Zinc and lead sales volumes in the quarter stood at 172 kt/42 kt, in line with our est of 175kt/39kt. Revenue stood at ₹46.7bn (y-o-y: -16 per cent , q-o-q: +4 per cent ), in line with our estimate of ₹4,800 crore. EBITDA stood at ₹2,290 crore (y-o-y: -19 per cent , q-o-q: +8 per cent ), in line with our estimate of ₹2,280 crore. PAT stood at ₹1,620 crore (y-o-y: -27 per cent , q-o-q: -22 per cent ), in line with our est of ₹1,590 crore.
We cut FY20/21/22E EBITDA by 16 per cent/ 3 per cent/ 3 per cent , factoring in delayed projects. We factor in higher-than-previously estimated capex and cut our target price to ₹220 from ₹242. Maintain ‘Hold’ with ‘Equal Weight’ in sector EAP.
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