Hindustan Zinc gained 1.43% to Rs 283 after the mining company's consolidated net profit soared 55.93% to Rs 3,092 crore on 44% increase in revenue from operations to Rs 9,387 crore in Q1 FY23 over Q1 FY22.
Increase in net profit was mainly driven by higher London Metal Exchange (LME) prices while being partially offset by the rising input commodity prices. Sequentially, the company's net profit rose 5.6% quarter on quarter.
The increase in revenue from operations was led by higher zinc volumes & zinc LME prices as well as favorable exchange rates while partly offset by lower silver prices. Zinc LME prices and zinc metal sales increased 34.2% and 10.2% respectively in Q1 FY23 as compared to Q1 FY22.
Sequentially revenue increased by 6.7%, primarily due to higher zinc LME, gain from strategic hedging and higher lead & silver volumes which was partially offset by lower zinc volumes and lower lead & silver prices. Sequentially lead and silver sales volumes increased by 8.6% & 9.5% respectively.
Zinc cost of production before royalty (COP) was $1,264 (Rs 97,423) per million tonnes (MT) for the quarter,(on YoY basis, higher by 18.1% in USD terms and up 23.4% in INR terms and sequentially, it was up 11.3% in USD terms and up 14.1% in INR terms). The COP was affected largely on account of higher coal prices, input commodity inflation, lower domestic coal (linkage) availability partially offset by higher volume, better Sulphuric Acid realizations & improved recoveries.
EBITDA for the quarter was Rs 5,278 crore, up 48.3% yoy, primarily due to higher zinc LME & volumes. Sequentially EBITDA was up 5.4% on account of higher zinc LME prices and lead & silver volumes partly offset by higher cost.
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On the operational front, mined metal production for the quarter was at 252 kt, up 13.8% YoY on account of higher ore production at Kayad, Sindesar Khurd, Rampura Agucha mines. Sequentially, mined metal production saw a dip of 14.7% owing to lower ore production at our mines and overall metal grades.
Integrated metal production for the quarter was 260 kt, up 9.9% YoY, while remaining almost flat sequentially. Quarterly integrated metal production was bolstered by better plant & mined metal availability and was further supported by improved operating parameters. Integrated zinc production was 206 kt, up 9.7% y-o-y and sequentially was 2.4% lower. Integrated lead production for the quarter was up 10.8% y-o-y and 9.2% sequentially to 54 kt on account of the Pyro plant being operated in the Lead-mode for a part of the quarter and better plant availability.
Integrated silver production for the quarter was 177 MT, up 10.2% YoY and 9.4% sequentially in line with lead metal production.
As on 30 June 2022, the company's gross investments and cash & cash equivalents were Rs 24,254 crore as compared to Rs 20,789 crore at end of March 2022.
The company's net investments as at end of 30 June 2022, was Rs 21,439 crore as compared to Rs 17,966 crore at end of March 2022.
Commenting on the future outlook, Hindustan Zinc said, We keep the guidance for FY23 unchanged. Mined metal is expected to be between 1,050-1,075 kt & refined metal production in the range of 1,000-1,025 kt. FY23 saleable silver production is projected to be between 700-725 MT. Zinc cost of production in FY23 is expected to be in between $1,125-1,175 per MT. The project capex for the year is expected to be in the range of $ 125-150 million.
Commenting on the performance, Arun Misra, CEO, said, Hindustan Zinc delivered best first-quarter production for mined metal, refined metal & silver. With the exit run-rate for both mined & refined metal crossing over one million tonnes, we are fully geared to deliver another stellar performance this year. Board approval received for setting-up of the Fertilizer plant & an additional Roaster is also a welcome move. With such synergetic growth projects along the value chain, we are confident to deliver long-lasting sustainable value for all stakeholders.
Sandeep Modi, deputy & interim CFO, said, Hindustan Zinc touched a new milestone with highest ever quarterly Revenue, EBITDA and Net Profit. Our proactive approach to cash in the opportunity from higher LME through strategic hedging helped us to protect overall margin in an input commodity inflationary environment. As a management team, we continue to monitor the coal cost situation closely & all efforts are in place to ensure security over the short term and reduce dependence on Thermal in the medium to long term through right investments in renewable projects.
Hindustan Zinc, a Vedanta Group company, is an integrated producer of zinc, lead and silver. As of 30 June 2022, Vedanta hold 64.92% stake in the company.
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