Hindustan Zinc Q2 results: Net profit declines 35% to Rs 1,729 cr

Vedanta group firm Hindustan Zinc Ltd (HZL) on Friday reported a 35.4 per cent fall in consolidated profit to Rs 1,729 crore for the September quarter as lower sales and lower zinc prices continued to hurt. The company had posted a consolidated profit of Rs 2,680 crore in the year-ago period, HZL said in a filing to the BSE. ''Net profit for the quarter was at Rs 1,729 crore... and for H1 (April-September) FY24 it was Rs 3,693 crore, down 36 per cent year-on-year, primarily on account of lower EBITDA partly offset by lower tax expense,'' the company said in a statement. Consolidated income of the company during the July-September period declined to Rs 7,014 crore, as compared to Rs 8,703 crore in the year-ago period.

Despite an 11% rise in the quarter and the best quarterly performance since March 2022, zinc prices are still sharply off their 2022 highs as interest rate concerns and demand from top consumer China weighed on the base metal.

Quarterly revenue declined 18.6% to Rs 6,619 crore due to lower sales and lower London Metal Exchange prices of zinc and lead, the company's largest segment.

Stock of the Vedanta-owned company fell 4.5% after the results to the day's low of Rs 300.3 before recovering at end of trading session to Rs 309.

The company's board has approved pledging of 26 per cent equity held by Hindustan Zinc in Serentica Renewables India 4 in favour of the lenders. HZL CEO Arun Misra said the company witnessed significant milestone achievements in its expansion efforts during the quarter. ''With delivery of steady operational performance in the first half of the year and ramped up facilities, we are confident of delivering a standout financial year,'' Misra said. 

HZL Chief Financial Officer Sandeep Modi said the company is well positioned to execute its strategic priorities in FY24, revolving around cost optimisation, digital advancement enhancing its competitive edge, healthy cash flows and robust balance sheet, thereby generating a long-term sustainable value for shareholders. 

HZL's mined metal production for the quarter dropped 1.4 per cent to 2,52,000 tonnes, while refined metal production was at 2,41,000 tonnes, down 1.8 per cent. The company's integrated zinc production during the quarter dropped 2.3 per cent to 1,85,000 tonnes. 

Refined lead production for the quarter was flat at 57,000 tonnes, the company said, adding that it generated a cash flow of Rs 2,648 crore and paid a dividend of Rs 2,958 crore. Hindustan Zinc is the country's largest and the world's second-largest integrated zinc producer. HZL is a subsidiary of Vedanta Ltd, which owns 64.9 per cent stake in the company while the government holds a 29.5 per cent stake.

Planned maintenance activity also hurt production, Hindustan Zinc said earlier this month.

The company's annual estimate for zinc COP was unchanged at $1,125-$1,175 per metric tonne, as were its mined metal production and capital expenditure estimates.

Hindustan Zinc had said late last month that it plans to create separate entities for its zinc, lead, silver and recycling businesses to unlock "potential value."

Parent Vedanta is also planning to split into separate businesses.

With inputs from agencies