Hindustan Zinc Q2 Results Review - Earnings Inline, Silver Segment Contribution Rises: Systematix

Systematix Research Report

Hindustan Zinc Ltd.’s Q2 FY25 revenue of Rs 82.5 billion (+21.5%/+1.5% YoY/QoQ) was in line with our estimate. Ebitda of Rs 41.2 billion (+31.3%/+4.5% YoY/QoQ) was also in line with our estimate. Ebitda margin improved by 374 bps/142 bps YoY/QoQ to 50% during the quarter. At 198kt, zinc volumes were higher by 7% YoY but fell 6.2% sequentially.

Zinc/lead prices averaged $2,779/tonne (+14.4%/-1.9% YoY/QoQ) and $2,044/tonne (-5.8%/-5.7% YoY/QoQ), respectively, during the quarter. The base metal prices normalized during the quarter versus the momentum seen in the previous quarter as the market supply chain adjusted to the absence of Russian metals at LME exchanges.

Silver prices rallied along with gold, averaging at $29.4/Oz, rising by 24.7%/2.1% YoY/QoQ, on a strong demand outlook. Hindustan Zinc’s margins benefited from favorable silver prices and volumes partially offsetting the impact of lower volumes during the quarter.

Zinc cost of production (excluding royalty) of $1,071/tonne fell 5.8%/3.3% YoY/QoQ due to soft coal and input commodity prices, better coal linkages, and improved grades. For the full year FY25, the management maintains its CoP guidance between $1,050-1,100/tonne.

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