Hindustan Zinc beats estimates, Q1 net profit up 56% at Rs 3,092 crore

Beating street estimates, Hindustan Zinc, a subsidiary of Vedanta, reported a 56 per cent year-on-year increase in net profit for the quarter ended June 30, 2022 (Q1) at Rs 3,092 crore, on the back of higher realisation. In the year-ago period, net profit came in at Rs 1,983 crore.

Revenue from operations increased to Rs 9,236 crore in Q1 versus Rs 6,378 crore last year, led by higher zinc volumes and zinc LME prices as well as a favourable exchange rate while partly offset by lower silver prices, the company said.

Earnings before interest tax depreciation and amortisation (Ebitda) jumped 48 per cent to Rs 5,278 crore versus Rs 3,558 crore last year.

Bloomberg consensus estimates had pegged Q1 net profit, revenue and Ebitda at Rs 3,038 crore, Rs 9,092 crore and Rs 4,948 crore, respectively.

Zinc and lead sales were up 10 per cent each to 206,000 tonnes and 54,000 tonnes, respectively, in Q1, while that of silver had risen 11 per cent to 177 tonnes in the quarter under review.

Arun Misra, chief executive officer, Hindustan Zinc, said the company had delivered a strong first-quarter production for mined metal, refined metal and silver. “With the exit run-rate for both mined and refined metal crossing over one million tonnes, we are geared to deliver strong performance this year.”

The company’s board approved its plan to set up a 500,000 tonne-fertiliser plant through a new wholly owned subsidiary and 160,000 -tonne roaster used for zinc and lead production. It plans to spend Rs 1,000-1,200 crore this fiscal year on these projects.

The cost of production of zinc before royalty, however, was up 18 per cent at $1,264 (Rs 97,423) a tonne on higher coal prices, a rise in allied input costs and lower domestic coal (linkage) availability, which were partially offset by higher volume, better sulphuric acid realisations and improved recoveries, the company said.

The company said it continued to monitor the situation closely on coal costs and efforts were being put to reduce dependence on coal in the long term through investments in renewable projects.

The company has retained mined metal production at last year’s level at about 1.07 million tonnes and refined metal production at 1.02 million tonnes for FY23, while saleable silver production is estimated at 725 tonnes during the fiscal year. The cost of production of zinc in this fiscal year is expected to be at $1,175 a tonne, Misra said.

Last week, the company had announced an interim dividend of Rs 21 per share for FY23, taking its total outflow to Rs 8,873 crore. It was ranked among the top-ten dividend-paying companies in the country, according to a list compiled by BS Research Bureau for FY22.

On Thursday, shares of Hindustan Zinc closed trade on BSE at Rs 283 apiece, up 1.43 per cent over the previous day’s close. In the last five days, the stock is down 1.08 per cent, while in the last one month, the stock is up 7.4 per cent.