Hindustan Zinc, a prominent metal company under the Vedanta Group, has become an attractive investment ahead of the Diwali festival due to its solid performance and strategic growth plans. The stock has surged by over 60% year-to-date, significantly outperforming Vedanta, which has grown by 18% on the BSE. Q2 FY25 results were in line with projections, reinforcing Hindustan Zinc’s standing as a high-dividend-yield option among large-cap metal stocks.
The company’s ambitious plans include a $2 billion (₹17,000 crore) investment to double its production capacity to 2 million tonnes, as announced by CEO Arun Misra. To accomplish this, Hindustan Zinc is actively seeking mining partners and consultants. Additionally, a potential demerger is on the table, with discussions underway to separate the business into two units, a move intended to drive value and focus within its operations.
JM Financial has reiterated its “BUY” recommendation on Hindustan Zinc, with a target price of ₹540 per share, citing several key points:
- Production Guidance: FY25 guidance remains at 1,075-1,100 tonnes of refined metal and 750-775 tonnes of silver.
- Cost Control: Cost of production is targeted at $1,050-1,100 per tonne, with an emphasis on the lower range.
- Upcoming Projects: The 160 ktpa Roaster at Debari is set for Q4 FY25, and the Fertilizer Private Limited project will be operational by Q2 FY25.
- Strategic Partnerships: Collaborations with Aesir Technologies for nickel-zinc batteries and Serentica Renewable for renewable power requirements underline diversification efforts.
In Q2 FY25, Hindustan Zinc posted a revenue of ₹8,252 crore, marking a 22% year-over-year increase due to higher zinc and silver prices and a strong dollar. Net profit, excluding exceptional items, rose by 38% year-over-year to ₹2,389 crore. The company’s net debt as of September 30, 2024, stood at ₹57 billion, compared to ₹3 billion on June 30, 2024, reflecting its recent investment commitments and expansion objectives. These factors, combined with its cost-efficiency and high-grade captive mines, contribute to a positive outlook for Hindustan Zinc’s continued growth.
Disclaimer: This content is for informational purposes only and does not constitute financial advice, investment recommendations, or an endorsement of any specific security, investment strategy, or stock. Past performance is not indicative of future results, and investments in the stock market carry risks, including potential loss of principal. Please conduct your own research and consult with a licensed financial advisor before making any investment decisions. The information presented here is based on publicly available sources as of the date of publication and may change without notice.
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