28 Apr , 2021 By : Kanchan Joshi
Shares of Vedanta group company Hindustan Zinc Ltd lost about 3% on the NSE on Tuesday. This followed a sharp intraday up move of about 5% on Monday following the announcement of its Q4 results. Its strong operating performance in the March quarter was well received by Dalal Street participants.
Hindustan Zinc put up an impressive operating performance in Q4FY21 with earnings before interest, tax, depreciation, and amortization (Ebitda) at Rs3,870 crore, beating estimates courtesy higher volumes and lower costs. On a year-on-year (y-o-y) basis, volumes grew 14%, 29% and 41% for zinc, lead and silver respectively, aided by the low base from covid-impacted Q4FY20. Higher volumes and structural efficiencies kept cost-of-production significantly below earlier target of $1,000 at $945/tonne, excluding-royalty. Strong volumes and sharp rise in metal prices translated into revenue growth of 58% y-o-y.
Going ahead, its management has guided for higher y-o-y refined metal production of 1,025-1,050ktonnes for FY22. Production for saleable silver has also been guided higher at 720 million tonnes in FY22. Meanwhile, given the covid-led restrictions, the final commissioning of its fumer plant has been delayed and is now expected to complete by Q2FY22.
Nonetheless, analysts at Kotak Institutional Equities point out that the company has achieved its rated production run-rate of 1.2 million tonnes per annum in Q4FY21. "With completion of all expansion projects, it is well-placed to witness volume growth tailwinds over FY2022-23E," it said in a report on 27 April. The brokerage house estimates the company's volumes to grow at a compounded annual growth rate of 11%.
According to analysts at Motilal Oswal Financial, while the volume growth outlook for the company is strong, at the current valuation, it is already factored-in.
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