Hindustan Zinc Q1 profit up 56% to ₹3,093 cr on higher LME prices

Vedanta group company Hindustan Zinc Ltd. (HZL) has reported a 55.9% year-on-year rise in net profit at ₹3,093 crore for the quarter ended June 30, 2022, on higher LME (London Metals Exchange) prices, though partially offset by rising input costs.

The company's profit during the same period last year stood at ₹1,983 crore. However, net profit surged just 6% on a sequential basis from ₹2,929 crore during Q4 FY22.

Amid the release of Hindustan Zinc's earnings report, the company stock surged 1.43% to ₹283 on the BSE, while touching an intraday high of ₹286.75 (up 2.7%). The stock had opened a gap down from yesterday's close and picked up momentum only after the release of the earnings report.

The company's revenue from operations during the said quarter rose 43.7% to ₹9,387 crore, on higher zinc volumes, zinc LME prices, and favourable exchange rates. Hindustan Zinc's zinc LME prices and zinc metal sales increased 34.2% and 10.2%, respectively, YoY.

Sequentially, Hindustan Zinc's revenue rose 6.7%, primarily due to higher zinc LME, gain from strategic hedging and higher lead & silver, which rose 8.6% and 9.5%, respectively.

Arun Misra, the CEO of the company, says Hindustan Zinc delivered the “best first-quarter production” for mined metal, refined metal and silver in Q1 FY23.

The zinc-lead and silver producer's EBITDA grew 48.3% YoY for the June quarter at ₹5,278 crore. Sequentially, the EBITDA rose 5.4% on higher zinc LME prices and lead & silver volumes.

As of June 30, 2022, the company’s gross investments and cash & cash equivalents were ₹24,254 crore, up from ₹20,789 crore during the March quarter.

The mining giant in its outlook for FY23 kept it "unchanged". "Mined metal is expected to be between 1,050-1,075 kt & refined metal production in the range of 1,000-1,025 kt. FY23 saleable silver production is projected to be between 700-725 MT. The zinc cost of production in FY23 is expected to be between US$ 1,125-1,175 per MT. The project CAPEX for the year is expected to be in the range of US$ 125-150 million," the company says via a stock exchange filing.

On the operational front, Hindustan Zinc's mined metal production for Q1 grew 13.8% to 252 kt on higher ore production at Kayad, Sindesar Khurd, Rampura Agucha mines. Integrated metal production for the quarter was 260 kt, up 9.9% YoY, while integrated zinc production grew 9.7% to 206 kt YoY. The integrated lead production for Q1 was up 10.8% YoY at 54 kt, while the integrated silver production grew 10.2% YoY to 177 MT.

The earnings per share for the said quarter stood at ₹7.32 as compared to ₹4.69 during the same period last year and ₹6.93 during the previous quarter. During the quarter, the company's board also approved the formation of the wholly owned subsidiary company to set up a 5.0 ltpa fertiliser plant. The board also approved the setting up of a new roaster plant with a capacity of 160 ktpa.