Hindustan Zinc Ltd (HZL) shares experienced a slight decline in Thursday's trading session, ahead of the Vedanta group firm's eagerly awaited first-quarter results for the June period, expected later today. Despite the marginal dip in stock price, market analysts are forecasting a robust financial performance, projecting a substantial increase in net profit and sales.
As of June 30, Vedanta Ltd. holds a controlling stake in HZL, owning 60.71 percent of the company's shares. At 1:08 PM IST, HZL's stock was trading 0.63 percent lower at Rs 527.75 on the BSE.
Analyst Expectations for Q1 Performance
Brokerage firms have released their projections, largely anticipating a strong quarter for Hindustan Zinc, primarily fueled by favorable commodity prices.
- Antique Stock Broking expects HZL's revenue to grow by 55 percent year-on-year (YoY) to Rs 11,973 crore. This growth is attributed to firm zinc and silver prices, along with rupee depreciation, partially offset by hedging losses and slightly lower zinc volumes. The brokerage also forecasts a 99.9 percent YoY increase in EBITDA to Rs 7,630 crore and a 130 percent rise in Profit After Tax (PAT) to Rs 5,077 crore.
- Kotak Institutional Equities has pegged HZL's Q1 net profit at Rs 5,060 crore. They project net sales to surge by 60.6 percent YoY, reaching Rs 12,480 crore. Kotak estimates zinc sales to increase by 6 percent YoY and silver sales by 2.8 percent YoY, while lead sales are expected to decline by 2.1 percent YoY.
- Motilal Oswal Financial Services (MOFSL) believes strong zinc prices will be the primary driver for earnings in Q1, compensating for muted silver prices. They anticipate a sequential increase in the cost of production due to input cost inflation and expect overall volumes to fall quarter-on-quarter. MOFSL projects net profit to rise 124 percent YoY to Rs 5,015 crore on a 63.4 percent YoY increase in sales to Rs 12,699 crore.
- Nuvama forecasts HZL’s EBITDA to remain flat quarter-on-quarter at Rs 7,650 crore, supported by a 9 percent QoQ rise in average zinc prices and a 2 percent QoQ increase in average blended silver prices (due to an import duty hike). However, Nuvama notes that this will likely be offset by lower sales volumes across zinc (6.6 percent QoQ), lead (14.5 percent QoQ), and silver (15.3 percent QoQ). They also expect the cost of production (ex-royalty for zinc) to increase by 5 percent QoQ to $950 per tonne.
Overall, analysts widely expect Hindustan Zinc to report a significant doubling of year-on-year net profit, supported by strong commodity prices and lower costs of production, despite some moderation in sales volumes for certain metals.