Hindustan Zinc share price: Hold Hindustan Zinc, target price Rs 195: ICICI Direct

ICICI Direct has given a hold rating to Hindustan Zinc with a target price of Rs 195. The share price moved up by 0.16 per cent from its previous close of Rs 213.35. The stock’s last traded price is Rs 213.70.

Hindustan Zinc Ltd., incorporated in the year 1966, is a Large Cap company (having a market cap of Rs 89090.85 Crore) operating in Metals – Non Ferrous sector.

For the quarter ended 30-06-2020, the company reported a Standalone sales of Rs 3898.00 Crore, down 9.79 % from last quarter Sales of Rs 4321.00 Crore and down 20.84 % from last year same quarter Sales of Rs 4924.00 Crore. The Company reported net profit after tax of Rs 1359.00 Crore in latest quarter.

Investment Rationale
After the muted trend witnessed in in Q1FY21, base metal prices witnessed an uptick on a sequential basis in Q2FY21. In dollar terms, LME zinc prices during the quarter were up 18.7% QoQ to US$2339/tonne while lead prices were up 11.5% QoQ to US$1873/tonne. The brokerage expects zinc sales of ~185400 tonne (up 10.4% YoY, 13.8% QoQ), lead sales of 60125 tonne (up 36.6% YoY, 33.6% QoQ) and silver sales of ~195000 k g (up 44.4% YoY, 33.6% QoQ). The topline is likely to increase 25.7% YoY, 42.1% QoQ to | 5668 crore, EBITDA is likely to increase 43.2% YoY and 92.3% QoQ to Rs 3031 crore while PAT is likely to increase 3.1% YoY, 57.9% QoQ to Rs 2145 crore. It expects the EBITDA margin to come in at 53.5% (compared to 46.7% in Q2FY20 and 39.5% in Q1FY21).

Promoter/FII Holdings
Promoters held 64.9 per cent stake in the company as of June 30, 2020, while FIIs held 1 per cent, DIIs 32.2 per cent and public and others 1.9 per cent.

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