Prabhudas Lilladher recommended hold rating on Hindustan Zinc with a target price of Rs 225 in its research report dated July 19, 2019.
Prabhudas Lilladher's research report on Hindustan Zinc
Hindustan Zinc (HZ) reported EBITDA below our expectation by 3% (in line with consensus) due to lower than expected Lead/Silver volumes and higher power cost. Earnings visibility continued to worsen due to volatile ore grade. Ore grade slipped 0.3% QoQ to 7.5% despite low base. Deteriorating ore grade and peaked-out supply deficit would keep stock under pressure.
Outlook
We cut our earnings estimates by 11%/11% for FY20E/FY21E to factor in lower ore grade. We maintain HOLD with TP of Rs225 (earlier Rs240), EV/EBITDA of 6x FY21e.
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