Hindustan Zinc drops after reporting weak Q1 results


Hindustan Zinc dropped 1.39% to Rs 191.35 at 9:25 IST on BSE after net profit fell 46.55% to Rs 1036.86 crore on 25.45% drop in total income to Rs 3140.74 crore in Q1 June 2016 over Q1 June 2015.
The result was announced after market hours yesterday, 20 July 2016.
Meanwhile, the BSE Sensex was up 31.50 points, or 0.11%, to 27,940.51.
On BSE, so far 32,346 shares were traded in the counter, compared with an average volume of 1.23 lakh shares in the past one quarter. The stock hit a high of Rs 192.45 and a low of Rs 187.95 so far during the day.
The large-cap company has an equity capital of Rs 845.06 crore. Face value per share is Rs 2.
Hindustan Zinc said that the decrease in revenues was on account of lower volumes, primarily zinc, and lower LME prices partly offset by higher rupee depreciation and higher silver price. The zinc metal cost of production per metric tonne before royalty (COP) in Q1 June 2016 increased Rs 62138 in line with production plan of lower volumes from Rampura Agucha open cast mine in the current quarter and thus lower average grades. This was partly offset by lower coal & commodity prices, cost optimization projects in procurement & commercial and higher by-product credits. The COP in dollar terms will be better in the year ending 31 March 2017 (FY 2017) compared to previous year. The fall in revenue and rise in cost of production resulted in a 33% decline in earnings before interest, taxes, depreciation and amortization (EBITDA) to Rs 1130 crore in Q1 June 2016 over Q1 June 2015.
The smaller investment corpus on account of dividend pay-out in the beginning of the quarter led to lower investment income, which along with higher tax rate and higher depreciation resulted in fall in net profit.
Mr. Agnivesh Agarwal, Chairman of Hindustan Zinc said that in line with strong zinc fundamentals and company’s expectations, zinc prices surged 14% in Q1 June 2016 over Q1 June 2015, making it the best performing base metal. The company also witnessed a rally in silver prices, which along with increasing volumes is accentuating its contribution to profits, having reached almost 20% at present. The transition to underground mining is progressing well with robust mine development, especially during last few months. Production from underground mines has also ramped up significantly, he added.
Hindustan Zinc is a subsidiary of Vedanta (formerly known as Sesa Sterlite), a part of London listed Vedanta Resources plc, a global diversified natural resources company. The company is one of the largest integrated producers of zinc-lead and a leading producer of silver. As per the shareholding pattern, Vedanta holds 64.92% stake and the Government of India holds 29.54% stake in Hindustan Zinc as at 30 June 2016.

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