Hindustan Zinc

Good operational performance

Jul 22, 2021 09:07 IST capital market

Hindustan Zinc standalone net sales increased 63.73% to Rs 6,531.00 crore in Q1FY22 compared to Q1FY21 led by higher metal & silver volumes, higher zinc, lead & silver prices. Zinc sales volume increased 15% YoY and lead by 9% YoY in line with higher production and robust demand.  Sales of Zinc, Lead and Silver segment rose 64.15% to Rs 6,323.00 crore (accounting for 99.14% of total sales).  Sales of Wind Energy segment has gone up 19.57% to Rs 55.00 crore (accounting for 0.86% of total sales). 

Sequentially, revenue was down 5%, primarily driven by lower zinc, lead and silver volumes, lower metal premium, partly offset by higher zinc & lead LME prices and rupee depreciation. Zinc volume was down 5% and lead & silver volumes were both down 21% each. This was mainly due to lack of operator availability in view of second wave of covid-19. Zinc LME prices were sequentially up 6%, while lead prices were up 5%.

Zinc cost of production before royalty (COP) during the quarter was $1,070 (Rs. 78,952) per ton, higher by 5% y-o-y, (up 3% in INR terms and up 13% sequentially in USD terms (up 14% in INR terms). The increase in COP is primarily due to surge in input commodity prices.

Sequentially there was an increase in coal and diesel prices, cement prices as well as higher power costs coupled with lower volumes leading to an upward pressure on COP which was only partly offset by higher sulphuric acid credits and lower met coal cost.

Operating profit margin has jumped from 39.51% to 54.48%, leading to 125.76% rise in operating profit to Rs 3,558.00 crore on account of higher Zinc Lead LME and increase in Silver prices as well as higher metal premiums.  Employee cost decreased from 6.15% to 2.86%.   Other expenses fell from 52.62% to 41.26%.   Selling and administration expenses fell from 12.11% to 11.37%.   Power and Oil fuel cost fell from 10.15% to 7.54%.  

Other income fell 48.98% to Rs 349 crore.  Profit before interest, tax and other unallocable items (PBIT) has jumped 170.66% to Rs 2,934.00 crore.  PBIT of Zinc, Lead and Silver segment rose 174.48% to Rs 2,893.00 crore (accounting for 98.60% of total PBIT).  PBIT of Wind Energy segment rose 36.67% to Rs 41.00 crore (accounting for 1.40% of total PBIT). 

PBIT margin of Zinc, Lead and Silver segment rose from 27.36% to 45.75%.  PBIT margin of Wind Energy segment rose from 65.22% to 74.55%.  Overall PBIT margin rose from 27.81% to 46.00%. 

Provision for interest up 76.92% to Rs 92 crore.  Provision for depreciation rose 20.96% to Rs 658 crore. 

Profit before tax grew 89.72% to Rs 3,157.00 crore.  Provision for tax was expense of Rs 1040 crore, compared to Rs 305 crore.  Effective tax rate was 34.40% compared to 18.33%.

Profit after tax rose 45.92% to Rs 1,983.00 crore mainly driven by recovery in metal prices and higher volumes. 

Commenting on the Q1 performance, Mr Arun Misra, CEO, said: ?We delivered highest-ever Q1 ore, refined metal & silver production. After exiting at a run-rate of 1.2 mtpa in fiscal year 2021, we maintained the momentum of production in Q1 with Year-on-Year growth of 15% in ore, 17% in refined metal & 37% in silver inspite of the spurt in covid cases in the second wave of the pandemic. Besides good operational performance, I am happy to inform that Hindustan Zinc has received Most Sustainable Company in the Mining Industry - 2021 award from World Finance Sustainability Award 2021. Also, our Rampura Agucha mine has won CIIs Best Application & Use of Renewable Energy award in the 5th Edition CII National Energy Efficiency circle -2021?

Mr Vinaya Jain, Sr. VP & Head Finance, said: ?We delivered our best ever Q1 Revenue, EBITDA and Profit after tax (PAT). Our strong balance sheet enables us to make proactive investments in operations and digitalization that will further enhance our mining output. We do recognize the headwinds from rising input commodity prices and are doubling our efforts to address them through long lasting structural cost initiatives. Additionally, we remain committed to our ESG goals and will continue to deploy necessary resources towards them. Sharp focus on cost leadership and profitability while building a sustainable business, will ensure long term value to all stakeholders.?

Operational Performance

Mined metal production for the quarter was up 9% y-o-y to 221kt on account of higher ore production, partly offset by lower overall grade. Sequentially, MIC production was down 23% on account of lower ore production and overall grades.

Integrated metal production was 236kt for the quarter, up 17% y-o-y in line with higher mined metal availability. Sequentially it was down 8% in-line with lower ore production due to lack of operator availability at the mines in view of second wave of COVID-19.

Integrated zinc production was 188kt, up 20% y-o-y and down 4% sequentially. Integrated lead production was 48kt, up 9% y-o-y and down 21% sequentially.

Integrated silver production was 161tons, up 37% from a year ago in line with higher lead production, partly offset by lower grades at Sindesar Khurd (SK) mine, while it was down 21% sequentially primarily in-line with lower lead production.

Full year results analysis

Net sales (including other operating income) of Hindustan Zinc has increased 21.92% to Rs 22,629.00 crore.  Sales of Zinc, Lead and Silver segment rose 20.78% to Rs 21,932.00 crore (accounting for 99.37% of total sales).  Sales of Wind Energy segment has gone down 19.65% to Rs 139.00 crore (accounting for 0.63% of total sales). 

Operating profit margin has jumped from 47.66% to 51.58%, leading to 31.93% rise in operating profit to Rs 11,672.00 crore.  Employee cost decreased from 3.65% to 3.39%.   Other expenses fell from 49.42% to 44.48%.   Selling and administration expenses fell from 12.48% to 12.32%.   Power and Oil fuel cost fell from 9.04% to 7.74%.  

Other income fell 5.95% to Rs 1819 crore.  Profit before interest, tax and other unallocable items (PBIT) has jumped 39.93% to Rs 9,329.00 crore.  PBIT of Zinc, Lead and Silver segment rose 41.06% to Rs 9,251.00 crore (accounting for 99.16% of total PBIT).  PBIT of Wind Energy segment fell 28.44% to Rs 78.00 crore (accounting for 0.84% of total PBIT). 

PBIT margin of Zinc, Lead and Silver segment rose from 36.11% to 42.18%.  PBIT margin of Wind Energy segment fell from 63.01% to 56.12%.  Overall PBIT margin rose from 36.37% to 42.27%.

Provision for interest up 244.64% to Rs 386 crore.  Loan funds rose to Rs 6,473.00 crore as of 31 March 2021 from Rs 611.00 crore as of 31 March 2020.  Inventories declined from Rs 1,835.00 crore as of 31 March 2020 to Rs 1,425.00 crore as of 31 March 2021.  Sundry debtors were higher at Rs 406.00 crore as of 31 March 2021 compared to Rs 379.00 crore as of 31 March 2020.  Cash and bank balance rose to Rs 9,376.00 crore as of 31 March 2021 from Rs 1,918.00 crore as of 31 March 2020.  Investments declined from Rs 20,329.00 crore as of 31 March 2020 to Rs 12,957.00 crore as of 31 March 2021. 

Provision for depreciation rose 11.06% to Rs 2531 crore.  Fixed assets declined from Rs 18,706.00 crore as of 31 March 2020 to Rs 18,369.00 crore as of 31 March 2021.  Intangible assets increased from Rs 252.00 crore to Rs 361.00 crore. 

Profit before tax grew 26.03% to Rs 10,574.00 crore.  Provision for tax was expense of Rs 2594 crore, compared to Rs 1585 crore.  Effective tax rate was 24.53% compared to 18.89%.

Profit after tax rose 17.27% to Rs 7,980.00 crore. 

Promoters stake was 64.92% as of 31 March 2021 compared to 64.92% as of 31 March 2020 .  Promoters pledged stake was 22.83% as of 31 March 2021

Cash flow from operating activities increased to Rs 10,567.00 crore for year ended March 2021 from Rs 6,621.00 crore for year ended March 2020.  Cash flow used in acquiring fixed assets during the year ended March 2021 stood at Rs 2,481.00 crore, compared to Rs 3,637.00 crore during the year ended March 2020.

The scrip is currently trading at Rs 327

 

Hindustan Zinc : Standalone Results

Particulars

2106 (03)

2006 (03)

Var.(%)

2103 (12)

2003 (12)

Var.(%)

Net Sales

6,531

3,989

64

22,629

18,561

22

OPM (%)

54.5

39.5

 

51.6

47.7

 

OP

3,558

1,576

126

11,672

8,847

32

Other Inc.

349

684

-49

1,819

1,934

-6

PBIDT

3,907

2,260

73

13,491

10,781

25

Interest

92

52

77

386

112

245

PBDT

3,815

2,208

73

13,105

10,669

23

Depreciation

658

544

21

2,531

2,279

11

PBT

3,157

1,664

90

10,574

8,390

26

PBT before EO

3,157

1,664

90

10,574

8,390

26

EO Income

-134

0

-

0

0

-

PBT after EO

3,023

1,664

82

10,574

8,390

26

Taxation

1,040

305

241

2,594

1,585

64

PAT

1,983

1,359

46

7,980

6,805

17

EPS (Rs)*

#

#

 

18.9

16.1

 

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 : Standalone Segment Results

 

% of (Total)

2106 (03)

2006 (03)

Var.(%)

% of (Total)

2103 (12)

2003 (12)

Var.(%)

Sales

Zinc, Lead, Others

80

5,217

3,207

63

78

17,550

15,715.00

12

Silver Metal

17

1,106

645

71

19

4,382

2444

79

Wind Energy

1

55

46

20

1

139

173

-20

Revenue from operations

98

6,378

3,898

64

98

22,071

18,332

20

Other Operating Income

2

153

91

68

2

558

229

144

Total Operating Income

100

6,531

3,989

64

100

22,629

18,561

22

PBIT

Zinc, Lead, Others

65

1,898

522

264

58

5,400

4431

22

Silver Metal

34

995

532

87

41

3,851

2127

81

Wind Energy

1

41

30

37

1

78

109.00

-28

Total PBIT

100

2,934

1,084

171

100

9,329

6,667

40

Less : Interest

 

92

52

77

 

386

112

245

Add: Other un-allcoable

 

181

632

-71

 

1,631

1,835.00

-11

PBT

 

3,023

1,664

82

 

10,574

8,390

26


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