Hindustan Zinc Share Price Falls After 21% YoY Decline in Q4 Profit

Hindustan Zinc Ltd (HZL), a firm within the Vedanta group, has reported a 21 percent year-on-year decline in its net profit for the fourth quarter, amounting to Rs 2,038 crore. This dip came amid a global downturn in zinc prices, which has impacted HZL’s performance adversely, given that demand growth has been slower compared to the pace of supply expansion.

Comparing this quarter’s performance to the same period in the previous year, HZL witnessed a drop in consolidated net profit from Rs 2,583 crore to Rs 2,038 crore. However, there was a marginal increase of 0.5 percent in net profit sequentially, rising from Rs 2,028 crore in the third quarter to Rs 2,038 crore in the fourth.

In terms of revenue, HZL’s operations generated Rs 7,285 crore during the reporting quarter, reflecting a 12 percent decline from the Rs 8,281 crore reported a year ago. However, on a quarter-on-quarter basis, there was a 3 percent increase in revenue.

The consolidated earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter stood at Rs 3,637 crore, a decrease of 14 percent compared to the same quarter last year, which reported Rs 4,208 crore.

The decline in revenue can be attributed to substantially lower prices of zinc and lead, along with reduced lead volume. This was partially offset by increased volumes of zinc and silver, as well as favorable exchange rates, according to statements from the company.

The industrial metals market, including copper, aluminum, zinc, and lead, has experienced significant price surges since April due to concerns over supply constraints. However, sustainability of these price increases relies on a substantial uptick in zinc demand and a shift in market focus away from anticipated metal surpluses.

Despite the challenging market conditions, HZL has managed to maintain a steady margin of 47 percent by consistently reducing costs. Sandeep Modi, the company’s chief financial officer, highlighted this achievement, noting that HZL recorded its fifth consecutive quarter of cost reduction, achieving the lowest cost in the past three years.

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For the fiscal year 2024, mined metal production reached a record high of 1,079 kilotonnes (KT), marking a 2 percent increase from the previous year. This growth was primarily driven by improved mined metal grades, as stated in the company’s earlier release.

In the March quarter, mined metal production stood at 299 KT, showing an 11 percent increase from the previous quarter. This growth was attributed to a combination of improved mined metal grades and higher ore production across various mines.

Furthermore, HZL achieved its highest silver volume in FY24 at 24.0 million ounces, marking a 5 percent year-on-year increase. Refined lead production also saw growth, reaching 216 KT, up by 3 percent compared to the previous year.

Looking ahead to fiscal year 2025, HZL anticipates further growth in both mined metal and refined metal production. This expectation is based on the ramp-up of major projects commissioned in the preceding year and improved capacity utilisation.

HZL projects mined metal production for FY25 to range between 1,100-1,125 KT, while refined metal production is expected to be in the range of 1,075-1,100 KT. Saleable silver production for FY25 is estimated to be between 750-775 metric tonnes.

The cost of zinc production for FY25 is forecasted to be between USD 1,050-1,100 per metric tonne. Additionally, the projected capital expenditure (capex) for the year is expected to fall within the range of USD 270-325 million.

Source: moneycontrol.com

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