Hindustan Zinc Q4 Preview: Here's what analysts expect from the metal miner

Non-ferrous miner Hindustan Zinc Ltd (HZL) is set to report earnings for the quarter and financial year ending on March 31, 2024 later on Friday. The brokerage firms expect the metal player owned by Vedanta Ltd and Government of India to report a muted performance in the quarter.

According to the brokerage firms, HZL may report a flattish performance on quarter-on-quarter (QoQ) basis, while year-on-year (YoY) performance may a take a big hit in terms of revenue, profit after tax (PAT) and Ebitda, all falling in double digits. Ebitda margin may clock a decline of up to 350 basis points (bps) in the quarter.

Analysts believe that the sustained soft zinc prices and weak operational performance may weigh on the cyclical play. However, announcement of dividends and management commentary will be keenly tracked by the street.

Kotak Institutional Equities expects HZL to report a revenue of Rs 7,580.9 crore up 3.7 per cent QOQ but down 10.9 per cent YoY in the March 2024 quarter. Ebitda may remain flat on a sequential comparison, falling 17 per cent on a yearly basis to Rs 3,527.3 crore. Net profit may come in at Rs 2,006.5 crore, down 22.3 per cent YoY and 1.1 per cent QoQ.

"We expect zinc, silver and lead sales to increase by 3.9 per cent, 3.8 per cent and 0.1 per cent YoY, respectively," it said. The brokerage sees pressure on Ebitda despite higher sales on the back of lower zinc prices. Kotak expects Ebitda margin to fall 348 bps YoY to 46.5 per cent for Q4FY24.

Shares of Hindustan Zinc dropped more than 4.11 per cent to Rs 394.45 from day's high at Rs 411.10 on Friday, commanding a total market capitalization close to Rs 1.7 lakh crore. The stock had settled at Rs 404.75 in the previous trading session on Thursday.

Nuvama Institutional Equities pegs HZL's revenue at Rs 7,490 crore, up 2.5 per cent QoQ but falling 12 per cent YoY. Ebitda may fall to Rs 3,600 crore, plunging 15.5 per cent on a yearly basis, while adjusted PAT is seen at Rs 2,080 crore, up 2.4 per cent QoQ but down 20 per cent QoQ.

"We expect HZL's Ebitda to increase by 2 per cent QoQ driven by improved volume in zinc (up 8.4 per cent QoQ) and lower cost of production (down by 7 per cent QoQ), partially offset by a decline in zinc prices (down by 2 per cent QoQ) and lower lead and silver volumes," said Nuvama.

Phillip Captial pegs HZL's revenue at Rs 7,529.1 crore, up 3 per cent QoQ but down 11.5 per cent on a yearly basis. Ebitda is pegged at Rs 3,647.4 crore, up 3.6 per cent sequentially, but down 14.3 per cent on a yearly basis. Ebitda margin is seen falling 310 bps YoY to 48.4 per cent.

Hindustan Zinc may report a net profit of Rs 2,047.9 crore in the March 2024 quarter, falling 20.7 per cent YoY and flat on a sequential performance, said Phllip Capital. "Zinc volumes to be higher by 8 per cent but Zinc LME to be lower by 1 per cent QoQ. Also, the cost of production may decline 1 per cent QoQ," it added.