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Business News/ Markets / Stock Markets/  Hindustan Zinc share price jumps 5%; should you buy the stock after Q4 result? Here's what experts say
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Hindustan Zinc share price jumps 5%; should you buy the stock after Q4 result? Here's what experts say

Hindustan Zinc share price has been on a roll this month as it has gained nearly 41 per cent in April so far.

Hindustan Zinc share price has seen robust gains in April so far. (Photo: AFP/Getty Images) (AFP)Premium
Hindustan Zinc share price has seen robust gains in April so far. (Photo: AFP/Getty Images) (AFP)

Hindustan Zinc share price witnessed a smart recovery on Monday, April 22, as it jumped over 5 per cent in morning trade, following a nearly 2 per cent decline in the previous session after the company reported its March quarter results.

Hindustan Zinc share price opened at 399 against its previous close of 398.85 and rose about 5.3 per cent to the level of 419.95. The stock, however, pared gains and traded 3.22 per cent higher at 411.70 around 11:10 am.

Hindustan Zinc share price has been on a roll this month as it has gained nearly 41 per cent in April so far.

During market hours on Friday, April 19, the subsidiary of Vedanta reported a 26 per cent year-on-year (YoY) decline in its consolidated net profit to 2,038 crore for Q4FY24. The total sales also declined by 11 per cent YoY to 7,549 crore.

While the numbers were weak, they still exceeded the expectations of several brokerage firms thanks to better zinc and silver volumes, which offset lower lead volumes and lower metal prices.

Hindustan Zinc attributed the fall in revenue to lower zinc and lead prices with lower lead volumes. The company, however, said higher zinc and silver volumes, silver prices, and favourable exchange rates partly offset the decline in revenue.

Following the Q4 result, Hindustan Zinc share price ended 1.67 per cent lower on BSE.

Also Read: Hindustan Zinc's quarter net profit falls 26% to 2,038 cr amid low zinc prices

What should investors do?

Experts and brokerage firms do not appear upbeat about the stock as they point out the stock's rich valuation and believe most positives are already discounted into the current stock price. 

Several of them have revised their target prices but maintained their earlier views on the stock.

Also Read: Dynacons Systems & Solutions share price skyrockets over 83% in just 15 sessions, up 340% in a year

Nuvama Wealth Management maintained its 'reduce' call on the stock with a target price of 340 even as it upgraded FY25E and FY26E EBITDA by 21 per cent and 20 per cent, respectively, factoring in higher zinc and silver prices as well as higher zinc volume, partly offset by lower silver and lead volume.

The brokerage firm said, "Hindustan Zinc will soon enter into the growth phase as it is working to increase refined metal capacity to up to 2mtpa from 1.12mtpa. We raise EV/EBITDA multiple to 7 times (6.5 times earlier) lifting the target price to 340 (earlier 257). We reiterate ‘reduce’ on valuation".

Also Read: Stocks to buy: SBI Card, Repco Home, Hikal among 9 stocks that can rise 11-26% in next 3-4 weeks; do you own any?

Kotak Institutional Equities has maintained a 'sell' call on the stock with a target price of 310.

According to Kotak, Hindustan Zinc's FY25 operational guidance suggests muted volume growth and no incremental cost reduction.

"We upgrade our zinc price assumptions as supply curtailments have pushed the market balance into deficit for CY24E. We increase EBITDA estimates by 9.2 per cent and 7.5 per cent for FY25E and FY26E, respectively, and fair value to 310 from 270 on higher metal prices. Maintain sell, given expensive 9.8 times EV/EBITDA FY2026E," said Kotak.

Motilal Oswal Financial Services reiterated its 'neutral' rating on the stock with a revised target price of 370 based on 6.5 times FY26E EV/EBITDA.

"The performance has been largely in line with our estimates. The company continues to focus on improving production with tight cost control. To account for lower cost of production (CoP) ahead and an improved demand outlook, we have increased our FY25/FY26 EBITDA estimates by 11 per cent and 10 per cent, respectively. Hindustan Zinc currently trades at 7 times FY26E EV/EBITDA and we believe all positive factors are priced in at the current levels," Motilal said.

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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.

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Published: 22 Apr 2024, 11:29 AM IST
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