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Hindustan Zinc slides after Q4 PAT decline 21% YoY

19-Apr-24 16:06 Hrs IST

Hindustan Zinc (HZL) slipped 1.46% to Rs 398.85 after company?s consolidated net profit fell 21.09% to Rs 2,038 crore in Q4 FY24 as compared with Rs 2,583 crore recorded in Q4 FY23.

Revenue from operations during the quarter was Rs 7,285 crore, down 12.02% year on year, on account of significantly lower zinc & lead prices and lower lead volume, partly offset by increased zinc & silver volumes, better silver prices and favorable exchange rates

Zinc cost of production before royalty (COP) for the quarter stood at $ 1,051 (Rs 87,284) per MT, lower by 4% QoQ and 13% YoY in both $ and Rs terms. Zinc COP for the full year was $ 1,117 (Rs 92,470) per MT, down by 11% YoY (8% lower in Rs terms). Cost improvement is majorly on account of better grades, softened coal and input commodity prices and better linkage coal materialization partly offset by lower acid realisation.

In Q4 FY24, EBITDA was Rs 3,637 crore, up 2%QoQ and down 14%YoY in line with the revenue from operations and cost improvement. EBITDA margin stood at 48% in Q4 FY24.

Mined metal production for the quarter was 299 kt, up 11% sequentially and down 1% y-o-y, driven by higher ore production across mines, further supplemented by improved mined metal grades but marginally down y-o-y.

Refined zinc production for the quarter was 220 kt, up 9% sequentially and 2% YoY. Refined lead production for the quarter was 53 kt, down 5% sequentially and 2% y-o-y.

Saleable silver production for the quarter was 189 MT, down 4% QoQ in line with lead metal production, partly offset by WIP depletion, and up 4% YoY on account of WIP depletion during the quarter.

As on 31 March 2024, the company?s gross investments and cash & cash equivalents were Rs 10,186 crore as compared to Rs 9,743 crore at the end of December?23 which was invested in high quality debt instruments. Total borrowings outstanding as on March 2024 was Rs 8,455 crore.

On full year basis, the company?s net profit fell 26.18% to Rs 7,759 crore in FY24 as against net profit of Rs 10,511 crore is recorded in FY23. Revenue from operations declined 15.59% YoY to Rs 28,082 crore in FY24.

The company has a robust free cash flow from operations post capex of Rs 9,004 crore for FY24 (sustenance capex of Rs 3,038 crore and growth capex of Rs 1,172 crore) contributing to a healthy balance sheet, while maintaining a consistent AAA credit rating.

Arun Misra, chief executive officer (CEO), said, ?FY 2023-24 has been a year of solid growth for HZL, with mined metal, refined metal, and silver recording its highest historic production levels, supported by a backdrop of fatality-free operations. As part of our strategy, it was driven by our increased focus on silver & metal production and cost optimisation. Fuelled by our robust silver maximisation strategy, I am thrilled to announce that HZL has now become the 3rd largest silver producer globally. Additionally, during the quarter, HZL also incorporated ?Hindmetal Exploration Services, as a wholly owned subsidiary, with an objective to explore, discover, develop and tap mineral resources aligning with the national focus and vision.

Our commitment on the sustainability efforts remains robust. I am happy to share that our renewable energy (RE) power delivery agreement of 450 MW is advancing well and the first flow of RE power is now preponed and expected to begin in April?24, contributing to our journey towards achieving net zero targets. With the full implementation of commissioned projects, HZL is poised for another exceptional year ahead.?

Sandeep Modi, chief financial officer (CFO), said: ?Despite the plunging metal prices, HZL has consistently sustained its margin at a steady 47% by recording its fifth consecutive quarter of sustained cost reduction, clocking the lowest cost in last 3 years. This demonstrates the effectiveness of our agile decision-making strategy, with instances such as maximization of silver production leveraging the soaring silver prices, power plant modifications ensuring better linkage coal consumption thereby lowering the power costs along with operational & commercial efficiencies.

I firmly believe that the challenges encountered throughout the year have strengthened our resilience and fortitude, propelling us to strive for even greater performance in the upcoming year towards our aspired annual targets and strong balance sheet.?

On its outlook for financial year 2024-2025, the company said that both mined metal and refined metal production in FY25 is expected to be higher than last year, given the rampup of all major projects commissioned in the last year and better capacity utilization.

Further stated, Mined metal is expected to be between 1,100-1,125 kt & refined metal production in the range of 1,075-1,100 kt. FY25 saleable silver production is projected to be between 750-775 MT. Zinc cost of production in FY25 is expected to be in between $1,050-1,100 per MT. Project capex for the year is expected to be in the range of US$ 270-325 million.

Hindustan Zinc, a Vedanta Group company, is an integrated producer of zinc, lead and silver. As of September 2023, Vedanta held 64.92% stake in the company.