Hindustan Zinc shares: Nuvama Institutional Equities said Hindustan Zinc's cash was wiped out due to higher dividend payout in FY23. The brokerage noted that the company had net debt of Rs 1,780 crore at FY23-end. Hindustan Zinc shares fell over 3 per cent in Monday's trade after the Anil Agarwal-led company gave a muted volume guidance while reporting an 11.78 per cent fall in its consolidated net profit at Rs 2,583 crore for the March quarter.
Hindustan Zinc has guided for a 3 per cent YoY growth in metal volumes for FY2024, which is disappointing given a majority of expansion projects are completed, said Kotak Institutional Equities.
"We expect zinc prices to remain range-bound as the market balance is likely to remain in surplus over the medium term. HZ has depleted all its surplus cash balance by paying higher dividends in FY2023 and the future capital structure remains uncertain," the brokerage said while maintaining a 'Sell' on the stock due to expensive valuations.
Nuvama Institutional Equities said Hindustan Zinc's cash was wiped out due to higher dividend payout in FY23. The brokerage noted that the company had net debt of Rs 1,780 crore at FY23-end.
"We expect operating cashflow of over Rs 13,000 crore in each of FY24E/FY25E. Though the acquisition of Zinc International is not yet off the book, we believe this will not come anytime soon. As a result, we expect Hindustan Zinc to continue paying dividend and factor in dividend per share of Rs 20 in FY24E/FY25E," Nuvama said while trimming its target for the stock to Rs 267 from Rs 276 earlier.
Motilal Oswal said it has marginally raised its FY24 estimates to incorporate cost reduction benefits. Hindustan Zinc, it said, is currently trading at a rich valuation of 6.5 times FY24E EV/Ebitda. We reiterate our Neutral rating on the stock with a target price of Rs 300 (6 times FY24 EV/Ebitda)," it said.
JM Financial, which has a target of Rs 335 on Hindustan Zinc, said it remained positive on the company, given its presence in the lower end of the global cost curve facilitated by high grade captive mines sufficient to meet requirements for decades, 100 per cent captive power plants, sizeable scale, diversified revenue stream with increasing contribution from silver sales.