Hindustan Zinc reported strong Q2 FY27 revenue of 14,582 crore (+76% YoY/+12% QoQ), 12% above Systematix' estimate, driven by higher metal production, higher by-product realisations, and a stronger dollar. Ebitda for the quarter stood at Rs 9,248 crore (+108% YoY/+15% QoQ), 12% above brokerage's estimate, supported by lower production costs. Ebitda margin improved by 928 basis points/272bps YoY/QoQ to 61.3% in Q2 FY27.
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Systematix Report
Following Hindustan Zinc Ltd.'s September-quarter results, brokerage firm Systematix has maintained its 'Buy' rating on the stock, supported by a favourable zinc and silver price environment, improving cost efficiencies and ongoing capacity expansion.
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Revision in FY27 zinc CoP guidance to $825-850/t from $975- 1,000/t reflects the benefit of higher sulphuric acid realisations, rising renewable energy penetration and improved operating efficiencies, despite some geopolitical cost pressures.
Silver production guidance of 680 tonne for FY27 remains intact, with volumes expected to rise further to ~730-750t in FY28 supported by debottlenecking efforts.
The brokerage remains constructive on the underlying commodity backdrop, with both zinc and silver expected to remain in supply deficit, although near-term prices could remain volatile amid geopolitical developments, energy costs, and currency movements.
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Systematix has raised its FY27E/FY28E Ebitda estimates by 23%/9%, reflecting stronger H1 FY27 performance, lower cost of production assumptions and higher zinc prices, and introduce FY29 estimates.
The brokerage values the zinc and lead businesses at nine times H1 FY29E EV/Ebitda and arrived at a revised SoTP-based target price of Rs 677/share from Rs 669 earlier, implying 26% upside from the reports current market price.
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