Hindustan Zinc – Q3 FY20 (Cons- UnAudited)
Total Income from ops at 5,117 Cr
6,090 Cr (-19.01%) YoY 5,101 Cr (0.31%) QoQ
YTD 9 month revenue 15,634 Cr Vs. 16,870 Cr (-7.32%)
Net Profit of 1,620 Cr
2,211 Cr (-26.72%) YoY |2,081 Cr (-22.11%) QoQ
YTD 9 month profit: 5,466 Cr Vs. 5,944 (-8.08%)
EPS (in Rs.) 3.83
5.23 YoY | 4.93 QoQ
YTD 9 month EPS 12.94 vs. 14.07
View: Result is in line with the expectation. YoY revenue declined and profit also declined but EBITDA up by 8% in QoQ due to higher metal and silver production on QoQ.
**Business Updates & Highlights**
EBITDA in Q3FY20 is around INR 2,288 Cr Vs. 2,851 Cr in Q3FY19 therefore declined by 20% and 2,120 cr in Q2FY20 and therefore up by 8% in QoQ.
Zinc business in Q3FY20 is around INR 3,165 Cr Vs. 3,841 Cr in Q3FY19 (declined by 18%) vs. 3,052 Cr in Q2FY20 (up by 4%).
Lead business in Q3FY20 is around INR 652 Cr Vs. 826 Cr in Q3FY19 (declined by 21%) Vs. 672 Cr in Q2FY20 (down by 4%).
Silver business in Q3FY20 is around INR 690 Cr Vs. 677 Cr in Q3FY19 (up by 2%) Vs. 577 Cr in Q2FY20 (up by 20%)
Others business iin Q3FY20 is around INR 165 Cr Vs. 210 Cr in Q3FY19 (down by 16%) Vs. 210 Cr in Q2FY20 (down by 21%).
**Update on Expansion Projects**
The ongoing mining expansion is in final phase and on track to achieve capacity of 1.2 Million MT per annum.
Capital mine development increased by 23% YoY to 13.3 Km in Q3 and by 17% to 36.4 KM YTD.
UG Shaft was commissioned and ore handling from shaft is expected to start in Feb 20. This will allow RA UG to achieve 4.5 mtpa production.
The two backfills plants are under commissioning and back filling into voids is expected to commence Feb 2020.
The furmer plant is undergoing hot commissioning and expected to produce first metal by Feb 2020.
ROE and ROCE is around 22% and 28% respectively. Book value per share is around INR 88 per share and share is currently trading at 2.45x times of its book value. Company is currently trading at annualized PE of around 14 which is average as per Industry benchmark. Promoter holding in the company is around 64.9% which is too good and stable. FIIs, Mutual fund and Insurance cos hold around 1.1%, 0.42% and 2.1% in the company. Company net cash & cash equivalent is around INR 19,513 Cr as of Dec 2019 and was invested in high quality debt instruments implying high safety by Crisil. The good thing is company is virtually debt free.
**Share View:**Share price high 291 (52 week) and now 216. Hindustan Zinc is one of the largest integrated producers of Zinc-lead in the world with a capacity of over 1.0 Million MT per annum and 9th largest global producer of silver. Hindustan Zinc has a world class resource base with a mine life of over 25 years. Company has zinc-lead mines at various locations at India. Hindustan Zinc is a subsidiary of Vedanta Limited.
Long term investor should continue with the company and any correction in price can good opportunity to enter. Company had earlier paid good dividend as well till the year 2018.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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