Hindustan Zinc Q2 profit declines by 35% to ₹1,729 cr

Hindustan Zinc Ltd, a wholly-owned subsidiary of Anil Agarwal-led Vedanta Group, released the financial results for the July to September quarter for the fiscal year 2023-24 on October 20. During the quarter under review, the company's consolidated profit after tax declined by 35% year-on-year to ₹1,729 crore as against ₹2,680 crore in the same period last year. The company attributes lower EBITDA (earnings before interest, tax, depreciation and amortisation) partly offset by lower tax expenses as the primary reason behind this decline.

In the September quarter, the company's revenue from operations stood at ₹6,791 crore, down by 18.5%, as against ₹8,336 crore in the corresponding period of the previous year on account of significantly lower zinc prices, lower zinc and silver volumes and differential strategic hedging impact partly offset by higher lead and silver prices and favourable exchange rates.

Sequentially, the company's profit declined by 12% as against ₹1,964 crore reported in the June quarter. The company's revenue from operations declined by 7% sequentially as against ₹7,282 crore in the June quarter, primarily due to lower zinc prices & volume and lower silver prices while being offset by favourable exchange rates, higher lead prices and improved lead & silver volumes, according to the company.

In the September quarter, the Vedanta Group subsidiary's EBITDA stood at ₹3,122 crore, witnessing a decline of 29% YoY, as against ₹4,387 crore in the same period last year. The company attributes lower revenue being partially offset by cost improvement to be the primary reason behind this decline.

Decline in production volume

During the quarter under review, the production of mined metal stood at 252 kt, down by 1.4% year-on-year and 2.0% sequentially mainly due to lower ore production at Rampura Agucha and Kayad mine partly offset by better overall metal grades. Refined metal production for the quarter was 241 kt, down 1.8% y-o-y and 7.1% sequentially on account of scheduled maintenance activity. Integrated zinc production for the quarter was 185 kt, down 2.3% y-o-y and 11.7% sequentially. Refined lead production for the quarter was 57 kt, flat as compared to Q2 FY23 and up 11.7% sequentially on account of pyro plant operations on lead mode during the quarter.

Saleable silver production for the quarter was 181 MT, marginally up sequentially and down 6.8% y-o-y due to accumulation of WIP in Q2 FY24.

The company has revised its growth guidance for FY24. "Mined metal is expected to be between 1,075-1,100 kt and refined metal production in the range of 1,050-1,075 kt. Saleable silver production is projected to be between 725-750 MT. Zinc cost of production in FY24 is expected to be in between $1,125-1,175 per MT. Project capex for the year is expected to be in the range of $175-200 million," says the company.

Following this, the share price of Hindustan Zinc closed 2.18% lower at ₹307.45.