Hindustan Zinc Q4 Review – Higher Prices, Cost Control Boost Profit: Center Broking

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Hindustan Zinc Ltd. reported Ebitda of Rs 49.6 billion (our estimate: 48.4 billion), in line with our estimate. Ebitda increased ~ 14% QoQ due to higher zinc prices (up 11.5% QoQ to $ 3,975 / ton) and ~ 2% QoQ higher volume.

Hindustan Zinc managed the cost well and the production cost of zinc ex-royalty dropped 1% QoQ to $ 1,136 / ton despite increase in coal cost. FY23 zinc-lead volume guidance was lower than expected and production costs remain high.

However, expectations of higher zinc prices offset the loss in volume and higher production costs. As a result, we largely retain our FY23E / FY24E Ebitda.

We expect zinc prices to have peaked and should fall from the current level with the possibility of declining demand in H2 FY23.

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