Results     03-Aug-24
Analysis
Hindustan Zinc
NP up 19%
Consolidated net sales (including other operating income) of Hindustan Zinc has increased 11.65% to Rs 8130 crore on account of better metal volume and metal & silver prices, further supported by a strong dollar and partly offset by lower silver volume. It is up 8% q-o-q on account of better metal & silver prices and favourable forex rates, partly offset by lower metal & silver volumes.

Sales of Zinc,Leadand Silver segment has gone up 11.13% to Rs 7,848.00 crore (accounting for 99.43% of total sales).  Sales of Wind Energy segment has gone down 8.16% to Rs 45.00 crore (accounting for 0.57% of total sales). 

Profit before interest, tax and other unallocable items (PBIT) has jumped 20.96% to Rs 3,145.00 crore.  PBIT of Zinc,Leadand Silver segment rose 21.36% to Rs 3,119.00 crore (accounting for 99.17% of total PBIT).  PBIT of Wind Energy segment fell 13.33% to Rs 26.00 crore (accounting for 0.83% of total PBIT). 

PBIT margin of Zinc, Lead and Silver segment rose from 36.39% to 39.74%.  PBIT margin of Wind Energy segment fell from 61.22% to 57.78%.  Overall PBIT margin rose from 36.56% to 39.85%. 

Operating profit margin has jumped from 45.96% to 48.54%, leading to 17.90% rise in operating profit to Rs 3,946.00 crore.  Employee cost increased from 2.68% to 2.84%.   Other expenses fell from 50.45% to 48.23%.   Selling and administration expenses rose from 11.75% to 11.93%.   Power and Oil fuel cost fell from 10.90% to 8.25%.  

Zinc cost of production before royalty (COP) for the quarter stood at US$ 1,107 (INR 92,375) per MT, lower by 7% (lower by 6% in INR terms) y-o-y on account of softened coal and input commodity prices, better linkage coal availability and better mined metal grades, further supported by operational efficiencies year on year. It was up 5% (up by 6% in INR terms) sequentially in line with volume and grade.

Other income fell 4.96% to Rs 268 crore.  PBIDT rose 16.12% to Rs 4214 crore.  Provision for interest rose 17.43% to Rs 256 crore. 

PBDT rose 16.04% to Rs 3958 crore.  Provision for depreciation rose 5.37% to Rs 844 crore. 

Profit before tax grew 19.31% to Rs 3,114.00 crore.  Share of profit/loss were nil in both the periods.  Provision for tax was expense of Rs 769 crore, compared to Rs 646 crore.  Effective tax rate was 24.69% compared to 24.75%.

Minority interest was nil in both the periods.  Net profit attributable to owners of the company increased 19.40% to Rs 2,345.00 crore. 

Promoters’ stake was 64.92% as of 30 June 2024 ,compared to 64.92% as of 30 June 2023 .  Promoters pledged stake was 99.04% as of 30 June 2024 ,compared to 99.37% as of 30 June 2023.

Commenting on the performance, Mr. Arun Misra, CEO, said: “Hindustan Zinc has started the year on a strong note, recording highest ever first quarter mined and refined metal production, leveraging strong metal prices during the quarter. It also gives me immense pleasure to inform you that we have expedited the commencement of our renewable energy power delivery with the receipt of the first flow of RE power from Serentica 180 MW solar project in May 2024. Further, we are set to accelerate our sustainability journey through contribution towards economic prosperity & environmental responsibility, and diversification by catering to high-end sectors responsibly with our strategic partnerships for utilising waste streams for extracting saleable products and supplying for next-generation nickel zinc batteries.

Further expanding our zinc product portfolio in the world, we have launched Asia’s first low carbon ‘green’ zinc, EcoZen, produced using renewable energy and certified by a renowned global sustainability consulting firm for its life cycle carbon footprint assessment. It boasts a carbon footprint of less than 1 tCO2e per tonne of Zinc produced, about 75% lower than the global average. We strongly believe that we can create further value for the Company by ensuring creation of separate verticals for the recycling and silver businesses in the coming days.” 

Mr. Sandeep Modi, CFO, said: “Ascertaining HZL’s global cost leadership, we have supressed the cost of production for the quarter at $1,107 per tonne, clocking a figure lower than last three financial years. With a holistic focus on operational cum financial excellence, we expanded the margins during the quarter, along with a commendable increase in the domestic primary zinc market share. I firmly believe that HZL has made its shareholders proud by providing c.133% returns during the quarter, highest amongst the large Indian companies, by the virtue of its positioning as the largest integrated precious metal company, ESG leader and a company committed for energy transition metals.”

Operational Performance

Mined metal production for the quarter was 263 kt, recording the highest ever first quarter production. It is up 2% y-o-y on account of improved mined metal grades, and lower 12% q-o-q in line with mine preparation activities being carried out every year in first quarter.

Refined metal production recorded the highest ever first quarter production at 262 kt, up 1% y-o-y. It is down 4% sequentially in line with the plant availability & pyro operations on lead mode from June 2024. Refined zinc production for the quarter was 211 kt, up 1% y-o-y & down 4% q-o-q.

Saleable silver production for the quarter was 167 MT, down 7% y-o-y and 12% q-o-q in line with lead metal production and WIP built up in the normal course of the business, on account of pyro operations being run on lead mode from June 2024. This WIP will be liquidated in the subsequent period

Full year results analysis

Net sales (including other operating income) of Hindustan Zinc has declined 15.15% to Rs 28932 crore.  Sales of Zinc,Leadand Silver segment has gone down 15.68% to Rs 27,926.00 crore (accounting for 99.44% of total sales).  Sales of Wind Energy segment has gone up 2.63% to Rs 156.00 crore (accounting for 0.56% of total sales). 

Profit before interest, tax and other unallocable items (PBIT) has slumped 28.27% to Rs 10,389.00 crore.  PBIT of Zinc,Leadand Silver segment fell 28.36% to Rs 10,307.00 crore (accounting for 99.21% of total PBIT).  PBIT of Wind Energy segment fell 13.68% to Rs 82.00 crore (accounting for 0.79% of total PBIT). 

PBIT margin of Zinc, Lead and Silver segment fell from 43.44% to 36.91%.  PBIT margin of Wind Energy segment fell from 62.50% to 52.56%.  Overall PBIT margin fell from 43.53% to 37.00%. 

Operating profit margin has declined from 51.34% to 47.20%, leading to 21.99% decline in operating profit to Rs 13,656.00 crore.  Employee cost increased from 2.47% to 2.85%.   Other expenses rose from 46.41% to 50.21%.   Selling and administration expenses rose from 11.88% to 12.09%.   Power and Oil fuel cost fell from 10.84% to 9.77%.  

Other income fell 22.12% to Rs 1074 crore.  PBIDT fell 22% to Rs 14730 crore.  Provision for interest rose 186.79% to Rs 955 crore.  Loan funds declined from Rs 11,881.00 crore as of 31 March 2023 to Rs 8,722.00 crore as of 31 March 2024.  Inventories rose to Rs 1,926.00 crore as of 31 March 2024 from Rs 1,862.00 crore as of 31 March 2023.  Sundry debtors were lower at Rs 155.00 crore as of 31 March 2024 compared to Rs 380.00 crore as of 31 March 2023.  Cash and bank balance declined from Rs 1,412.00 crore as of 31 March 2023 to Rs 175.00 crore as of 31 March 2024.  Investments rose to Rs 10,452.00 crore as of 31 March 2024 from Rs 10,107.00 crore as of 31 March 2023 . 

PBDT fell 25.75% to Rs 13775 crore.  Provision for depreciation rose 6.25% to Rs 3468 crore.  Fixed assets declined from Rs 19,767.00 crore as of 31 March 2023 to Rs 19,667.00 crore as of 31 March 2024.  Intangible assets increased from Rs 92.00 crore to Rs 180.00 crore. 

Profit before tax down 32.58% to Rs 10,307.00 crore.  Share of profit/loss were nil in both the periods.  Provision for tax was expense of Rs 2548 crore, compared to Rs 4777 crore.  Effective tax rate was 24.72% compared to 31.25%.

Minority interest was nil in both the periods.  Net profit attributable to owners of the company decreased 26.18% to Rs 7,759.00 crore. 

Equity capital stood at Rs 845.00 crore as of 31 March 2024 to Rs 845.00 crore as of 31 March 2023.  Per share face Value remained same at Rs 2.00. 

Promoters’ stake was 64.92% as of 31 March 2024 ,compared to 64.92% as of 31 March 2023 .  Promoters pledged stake was 98.35% as of 31 March 2024 ,compared to 87.59% as of 31 March 2023 . 

Cash flow from operating activities decreased to Rs 13,346.00 crore for year ended March 2024 from Rs 15,162.00 crore for year ended March 2023.  Cash flow used in acquiring fixed assets during the year ended March 2024 stood at Rs 3,866.00 crore, compared to Rs 3,594.00 crore during the year ended March 2023.    

The scrip is currently trading at Rs 651

  

Hindustan Zinc : Consolidated Results

Particulars

2406 (03)

2306 (03)

Var.(%)

2403 (12)

2303 (12)

Var.(%)

Net Sales

8,130

7,282

12

28,932

34,098

-15

OPM (%)

48.5

46.0

 

47.2

51.3

 

OP

3,946

3,347

18

13,656

17,506

-22

Other Inc.

268

282

-5

1,074

1,379

-22

PBIDT

4,214

3,629

16

14,730

18,885

-22

Interest

256

218

17

955

333

187

PBDT

3,958

3,411

16

13,775

18,552

-26

Depreciation

844

801

5

3,468

3,264

6

PBT

3,114

2,610

19

10,307

15,288

-33

Share of Profit/(Loss) from Associates

0

0

-

0

0

-

PBT before EO

3,114

2,610

19

10,307

15,288

-33

EO Income

0

0

-

0

0

-

PBT after EO

3,114

2,610

19

10,307

15,288

-33

Taxation

769

646

19

2,548

4,777

-47

PAT

2,345

1,964

19

7,759

10,511

-26

Minority Interest (MI)

0

0

-

0

0

-

Net profit

2,345

1,964

19

7,759

10,511

-26

EPS (Rs)*

#

#

 

18.4

24.9

 

Notes

* EPS is on current equity of Rs 845.06 crore, Face value of Rs 2, Excluding extraordinary items.

# EPS is not annualised

bps : Basis points

EO : Extraordinary items

Figures in Rs crore

Source: Capitaline Corporate Database

 

Hindustan Zinc : Consolidated Segment Results

 

% of (Total)

2406 (03)

2306 (03)

Var.(%)

% of (Total)

2403 (12)

2303 (12)

Var.(%)

Sales

Zinc,Leadand Silver

99

7848

7062

11

99

27926

33120

-16

Wind Energy

1

45

49

-8

1

156

152

3

Total Reported Sales

100

7893

7111

11

100

28082

33272

-16

Less: Inter segment revenues

 

0

0

-

 

0

0

-

Net Sales

 

7893

7111

11

 

28082

33272

-16

PBIT

Zinc,Leadand Silver

99

3119

2570

21

99

10307

14388

-28

Wind Energy

1

26

30

-13

1

82

95

-14

Total PBIT

100

3145

2600

21

100

10389

14483

-28

Less : Interest

 

256

218

17

 

955

333

187

Add: Other un-allcoable

 

225

228

-1

 

873

1138

-23

PBT

 

3114

2610

19

 

10307

15288

-33

 

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