Hindustan Zinc share price extend gains after Q3 results. Should you buy, sell or hold?

Hindustan Zinc share price rose by about 1% during the Saturday trading session as analysts reported that the Vedanta Group company's Q3 earnings were in line with street projections. On Friday's session post the Q3 results, Hindustan Zinc shares jumped over 4%. Hindustan Zinc share price today opened at ₹317.90 apiece on the BSE.

“Hindustan Zinc shares have been consolidating in a broad range of ₹290–340 since the last few weeks. This short-term trend is sideways in the stock, and a trended move could be seen only on a breakout from this range,” said Ruchit Jain, Lead Research Analyst at 5paisa. 

In the quarter that ended in December 2023, Hindustan Zinc reported a 6% decrease in consolidated net profit to ₹2,028 crore, mostly due to reduced income. In October-December of the previous fiscal year, 2022–2023—the company reported a net profit of ₹2,156 crore.

The company's net profit increased 17% on a quarter-over-quarter (q-o-q) basis compared to ₹1,729 crore in the July-September period. The company's  total income decreased to ₹7,606 crore during the reviewed quarter from ₹8,214 crore the previous year.

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On the standalone front, the company reported a rise of 17% in standalone net profit at ₹2,038 crore, compared to ₹2,157 crore in the year-ago period.

For the nine months ended December 31, 2023, the company's revenue declined 7% at ₹7,310 crore, compared to ₹7,866 crore in the year-ago period, it said in a regulatory filing.

The EBITDA for Q3FY24 stood at ₹3,560, down 4%, compared to ₹3,717 crore in the year-ago period. For the first nine months of FY24, EBITDA was ₹10,040 crore, down 25% YoY, mainly on account of lower revenue being partially offset by cost improvement.

Commenting on the performance, CEO Arun Misra said, “With our consistent focus on operational excellence, Hindustan Zinc delivered record nine months; mined metal and silver production to leverage the elevated silver price opportunities. The company’s sustainable operational progress is reflected in its industry-leading compounded annual production growth rate supplemented by safe practices."

Also Read: Hindustan Zinc Q3 Results: Net profit rises 17% to ₹2,038 crore; revenue declines 7% YoY

Here's what brokerages say

Nuvama Institutional Equities 

The brokerage said that Hindustan Zinc reported in-line Q3FY24 EBITDA of ₹3,520 crore, up 12.2% QoQ mainly due to reduced CoP and increased zinc and silver volumes.

The highlights are as follows: blended zinc realisation up 1.7% QoQ, silver realisation remained steady, and lead realisation fell 6% QoQ. Refined metal sales volume grew 7% QoQ to 259kt. Refined zinc CoP (ex-royalty) reduced 4% QoQ to USD1,095/t.

“Factoring in lower zinc volume and zinc-lead prices, we are trimming FY24E EBITDA by 3%. We expect DPS of INR25 each for FY25E and FY26E, translating to a yield of 8%. A rollover to FY26E earnings while valuing the stock at 6.5x EV/EBITDA yields a fair value of ₹257 (earlier ₹253); maintain ‘REDUCE’,” the brokerage said.

Antique Stock Broking 

The brokerage reports that Hindustan Zinc's revenue increased 7.6% QoQ to ₹7,310 crore, despite a 7.1% YoY fall in revenue. The sequential gain was attributed to greater zinc and silver volume as well as better zinc pricing, which were partially offset by lower lead prices and volume.

At ₹3,520 crore, EBITDA increased 12.1% sequentially but down 5% YoY. This was 6.5% more than the brokerage's expectation and 4% higher than the consensus.

The lowering of thermal coal prices and increased supply of linking coal contributed to cost reduction. At ₹2,040 crore, adjusted PAT climbed 17.3% QoQ but down 5.5% YoY.

"We arrive at a target price of ₹297 at a target multiple of 6x FY26E EV/EBITDA. We maintain HOLD rating as valuations are rich and dividend prospects stand affected," the brokerage said.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.