Comments
Arihant Capital
Hind Zinc (Neutral)
CMP: ₹168.75
Target: ₹178
Hindustan Zinc’s (HZL) 4QFY15 performance was better than expected largely due to strong zinc prices, falling inventory and strong demand. We expect demand for zinc to remain strong for next couple of years and with no major supply coming during the same period, prices for zinc are expected to remain strong. HZL reported 34 per cent y-o-y increase in mined metal production (269 kilo tonne). This was in line with management guidance of increased production from Rampura Agucha mine and Sindesar khurd mine. Integrated refined metal production of zinc-lead during the quarter was higher by about 39 per cent y-o-y.
Volumes for zinc and lead for HZL are expected to increase in double digit over next couple of years as we expect mining ramp up to yield results soon. We will be watchful of ramp up at Rampura Agucha mine and any delay in the same will act as a negative trigger for the stock. Nonetheless, our positive thesis on HZL is based on positive outlook on zinc prices corroborated by falling surplus in the market.
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.