Earnings Outlook
Higher volumes to aid Hind Zinc's Jan-Mar revenue growth
This story was originally published at 15:28 IST on 23 April 2025
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By Ashutosh Pati
MUMBAI – Better volumes and high base metal prices are likely to help Hindustan Zinc Ltd. report sharply higher revenue and net profit for the March quarter compared to a year ago.
The company -- one of the largest producers of zinc and silver -- is expected to post a net profit of INR 26.3 billion, up nearly 29% on year, according to the average of the estimates of four brokerage firms. Analysts expect the net profit of non-ferrous companies to grow in double digits on year, led by elevated pricing and muted cost of production. However, the net profit of Hindustan Zinc is likely to be marginally lower compared to the previous quarter. Estimates for the company's net profit range from INR 25.8 billion by Motilal Oswal Financial Services Ltd. to INR 27.2 billion by Systematix Shares and Stocks (India) Ltd.
The Vedanta group firm is likely to have earned revenue of INR 86.66 billion in the quarter ended March, according to the average of the estimates of four brokerages. The company's revenue is seen rising nearly 15% on year and 1% on quarter. Systematix Shares gave the lowest estimate for the company's revenue at INR 84.10 billion, while Kotak Institutional Equities gave the highest estimate of INR 88.76 billion.
Hindustan Zinc's earnings before interest, tax, depreciation, and amortisation is seen up 23.4% on year to INR 44.93 billion, according to the average of the estimates of four brokerages. Systematix and Kotak expect the company's EBITDA to rise mainly on better base metal prices. Prices of zinc have risen over 16% during the March quarter from the corresponding period last year. Estimates for the company's EBITDA range from INR 44.40 billion to INR 45.34 billion.
Sequentially, however, the EBITDA is likely to be unchanged as prices of zinc and lead fell during the quarter even as volumes improved, Nuvama Wealth Management Ltd. said. Prices of zinc and lead fell 7% and nearly 2% on quarter, respectively. The recent fall in prices was amid risks that demand for metals may come down due to tariffs by the US and the trade war between China and the US.
Slightly lower cost of production is likely to offset the negative impact of lower metal prices, analysts said. The company's cost of production for zinc, excluding royalty, for the March quarter is expected to decline 2% sequentially, according to Nuvama.
In an update earlier this month, Hindustan Zinc reported 4% on-year and 17% on-quarter growth in mined metal production in the March quarter at 310,000 tonnes -- the highest ever quarterly mined metal production since the company transitioned into underground mining. The transition to underground mining from open pit is usually done when resources at the surface have depleted or when underground resources are accessed. The rise in output was driven by higher mined metal grades, mills recovery, and an increase in production at the Agucha and Zawar mines.
The company's production of saleable metal fell marginally on year to 270,000 tonnes in the March quarter, but was up 4% sequentially. The company's saleable metals comprise refined zinc and lead. Production of refined zinc during the quarter was 214,000 tonnes, up 5% on quarter but down 3% on year. Production of refined lead was 56,000 tonnes, up 2% on quarter and 6% on year.
The company will detail its March quarter earnings on Friday. After the results, investors and analysts will track the company's guidance on volumes, realisations, cost of production, and future dividend payout, according to Motilal Oswal. "We await further insights on any other update related to the change in the corporate structure, if any," the brokerage said.
At 1500 IST, shares of Hindustan Zinc were up 0.4% at INR 447.30 on the National Stock Exchange. Since reporting its December quarter earnings on Jan. 28, shares of the company have risen around 3%. Of the three brokerage reports on the company available with Informist, two have a 'hold' rating on the stock, while one has a 'sell' rating. Among these brokerages, the highest target price was by Systematix at INR 463 and the lowest by Nuvama at INR 411.
Following are the Jan-Mar earnings estimates for Hindustan Zinc based on reports compiled by Informist from four brokerages in descending order by the estimate of net profit:
Brokerage firm | Net sales | Net profit | EBITDA |
----------(In INR million)------- | |||
Systematix Shares and Stocks (India) Ltd. | 84,100.00 | 27,200.00 | 45,300.00 |
Kotak Institutional Equities | 88,759.00 | 26,302.00 | 45,336.00 |
Nuvama Wealth Management Ltd. | 88,300.00 | 25,900.00 | 44,700.00 |
Motilal Oswal Financial Services Ltd. | 85,500.00 | 25,800.00 | 44,400.00 |
Average | 86,664.75 | 26,300.50 | 44,934.00 |
End
US$1 = INR 85.43
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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