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Systematix Report
Hindustan Zinc Ltd.'s Q2 FY22 Ebitda at Rs 33.4 billion (+13.0% YoY, -6.3% QoQ) was 2.8% below our estimates.
Zinc volumes at 162kt were lower by 10.0% YoY and 13.8% QoQ (10% below estimate). Zinc/lead prices averaged at $2,985/$2,377/t (+27.6%/26.7% YoY respectively); silver prices averaged at $25/Oz (+2.3% YoY).
Zinc cost of production (CoP) before royalty stood at $1,124 (+22.3% YoY, +5.0% QoQ) driven by higher prices for imported coal. Zinc prices have risen steadily since Q1 FY21 driven by production cut announcements at Nyrstar at their European smelters that have seen a sharp escalation in purchased power costs and are currently trading at $3,585/t.
We revise our price estimates for zinc to $3,100/$2,800 (from $2,700/$2,500/t) for FY22/23E, respectively.
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