**Hindustan Zinc - Q4 FY20 (Audited –Cons)**
CMP: 169
Total revenue from operations 4,321 Cr
5,384 Cr (-19.71%) YoY | 4,626 Cr (-6.59%) QoQ
Year ending revenue: 18,332 Cr Vs. 20,834 Cr (-12.01%)
Net Profit of 1,339 Cr
2,012 Cr (-33.41%) YoY 1,620 Cr (-17.34%) QoQ
Year ending Net profit: 6,805 Cr Vs. 7,956 Cr (-14.43%)
EPS (in Rs.) 3.17
4.76 YoY | 3.83 QoQ
Year ending EPS: 16.11 Vs. 18.83
View: Result is in line with the expectation. YoY revenue declined and profit also declined due to lower realization and impact on account of lockdown.
**Business Updates & Highlights**:
Zinc Business contributed around 67% revenue declined by 21% in YoY and 8% in QoQ. Lead business contributed around 16% revenue declined by 14% in YoY and up by 6% in QoQ. Silver business contributed around 14% revenue declined by 19% in YoY and declined by 13% in QoQ.
Q4FY20 Mined metal production up by 2% in YoY and 6% in QoQ. FY20 mined production declined by 2% as compare to corresponding previous year.
Q4FY20 EBITDA is around INR 1,961 Cr Vs. 2,797 Cr in Q4FY19 Vs. 2,288 Cr in Q3FY20 therefore declined by 30% in YoY and 14% in QoQ. FY20 EBITDA is around INR 8,849 Cr Vs. 10,747 Cr in FY19 therefore declined by 18%. Operating profit margin in Q4FY20 is around 44% Vs. 50.9% in Q4FY19 Vs. 48.9% in Q3FY20 therefore declined by 600 bps in YoY and 490 bps in QoQ.
Updates on upcoming projects: All major projects to build capacity of 1.2 Mtpa were completed during the year. Capital mine development decreased by 3% YoY to 11.6KM in Q4 and increased by 12% to 48KM in FY2020.
The fumer plant at chanderiya is ready for start-up and production is expected to commence in May 2020.
Total reserve & resources - Ore increased from 92.6 Mn at the end of FY2019 to 114.7 Mn MT at the end of FY20 while mineral resources totaled 288.3 Mn Mt.
**The board of directors declared an interim dividend of INR 16.5 per equity shares with face value of INR 2 each.
**Financial**
ROE and ROCE is around INR 20% and 28% respectively and book value per share is around INR 88 and share is currently trading at 1.9x of its book value. Company is currently trading at annualized PE of around 11 which is high as per industry benchmark. Promoter holding is around 64.9% in the company which is fair and stable. FIIs, mutual fund and insurance cos hold around 1% and 0.4% and 2.1% in the company. Cash and cash equivalent as of March 2020 is around INR 21,596 Cr Vs. 16,953 Cr as of March 2019 was invested in high quality safety rated debt instruments . The company is virtually debt free.
**Share View**: Share price high 259 (52 week) and now 169. Hindustan Zinc Limited is an integrated mining and resources producer of zinc, lead, silver and cadmium. It is a subsidiary of Vedanta Resources PLC. HZL is the world's second largest zinc producer with capacity of over 1.1 Mn MT per annum and the 6th largest global producer of silver.
Position: Share strong support price is INR 155/142. Investor can continue with the company with target price of INR 180/198.
Opportunities: Consistently dividend paying company its around 8%-10% in share price on YoY. Although its declined from previous year. Cash reserve and debt free company. Share has currently at beaten down value and FY21 should onwards should be good for company in longer run. Ongoing expansion project is on track and will be additional plus in future.
Risk: Q1 more challenging due to long lockdown in entire April and May also. Owing to uncertainty around ongoing lockdowns and business disruption risk, company has deferred the guidelines for FY21 to end of Q1.
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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