Hind Zinc Reports 5% Growth In Profits

Hindustan Zinc (HZL) has reported 5% growth in its net profits, which came in at Rs 1660 crore for the first quarter of the current fiscal. During the period, the company saw net sales of Rs 2939 crore. Sharp rupee depreciation and a softness in metal prices proved to its advantage.

HZL’s total mined metal production for the quarter was up 27% to 2.37 lakh tonnes. Zinc production was up 10% at 1.73 lakh tonnes, that of lead was flat at 29,110 tonnes and silver production went up by 9% to 77 tonnes. However, zinc prices declined by 5% on the London Metal Exchange in this time, while that of silver went down by 18%.

Sales moved up for all three metals, with zinc rising by 9% to Rs 1986 crore, lead up 18% to Rs 402 crore and silver moving 5% higher to Rs 408 crore. HZL’s EBITDA was at Rs 1506 crore, which marked a gain of 6%. The EBITDA margins, however, declined by 134 basis points from 52.58% to 51.24%.

The company has said that it has cash of Rs 22365 crore, of which Rs 14743 crore has been invested in debt mutual funds and Rs 5398 crore is in bank fixed deposits.

All in all, the performance during Q1 cannot be termed as robust as the company has benefitted out of rupee depreciation. With the outlook for metals remaining negative, there could be some pressure going ahead. The stock has already seen a negative response. Hence, we believe that it is best to stay away from this counter at the moment.