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Published: October 21, 2024
Updated: October 21, 2024

Hindustan Zinc Q2 Results Preview: Profit Expected to Surge 30-36% Amid Higher Zinc and Silver Prices

Strong Quarterly Performance Anticipated

Hindustan Zinc Ltd (HZL) is set to release its financial results for the September 2024 quarter (Q2FY25) and the first half of FY25 on Friday, October 18. Market analysts tracking the stock expect the company to deliver a strong year-on-year (YoY) performance, though quarter-on-quarter (QoQ) numbers may appear muted or flat.

Revenue and Profit Projections for Q2FY25

Brokerages are projecting a significant YoY increase in HZL’s revenue, profit, and EBITDA. Nuvama Institutional Equities expects the company to post a revenue of ₹8,026 crore for Q2FY25, representing an 18% YoY growth, though revenue is anticipated to remain flat on a sequential basis. EBITDA is projected to rise by 28% YoY to ₹4,012.2 crore, with core profit after tax (PAT) expected to jump 36% YoY to ₹2,360 crore. Similarly, Motilal Oswal Financial Services predicts a net profit of ₹2,200 crore, reflecting a 29% YoY increase, but down 5% QoQ. The firm also anticipates sales of around ₹7,800 crore, up 15% YoY but down 4% QoQ, with EBITDA rising by 23% YoY to ₹3,900 crore.

Factors Driving Growth

Higher zinc and silver prices during the quarter are expected to be key drivers of sales growth for HZL. Analysts are optimistic about the company’s increased volumes and margin expansion, especially due to lower cost of production (CoP) for zinc. Additionally, the potential for a dividend announcement is another factor drawing investor attention. Nuvama Institutional Equities noted that higher silver volumes and a lower CoP for zinc will likely offset the impact of lower zinc-lead prices, making the overall performance robust.

Brokerage Ratings and Targets

Brokerages have varied recommendations on HZL. Nuvama holds a ‘reduce’ rating on the stock, while Motilal Oswal maintains a ‘neutral’ stance with a target price of ₹570. They emphasize the importance of guidance on CoP, volumes, realizations, and any potential updates on corporate restructuring. Kotak Institutional Equities expects revenue to be around ₹7,985 crore, up 18% YoY, but has a ‘sell’ rating with a lower target price of ₹365.

Positive Outlook with Caution

While Hindustan Zinc is poised for a strong YoY performance in Q2FY25, analysts caution about potential sequential dips in some metrics. Higher zinc and silver prices, combined with improved volumes, are expected to support growth. Investors will closely watch the company's guidance on production costs and dividend announcements, as these will be key factors influencing stock movement in the near term.