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Hindustan Zinc Q1 PAT up 46% YoY to Rs 1,983 crore

July 22,2021  15:58

Increase in net profit was mainly driven by recovery in metal prices and higher volumes. Sequentially, the company's net profit has declined by 20%.

Revenue from operations was led by higher metal & silver volumes, higher zinc, lead & silver prices. Zinc sales volume increased 15% YoY and lead by 9% YoY in line with higher production and robust demand.

Sequentially, revenue was down 5%, primarily driven by lower zinc, lead and silver volumes, lower metal premium, partly offset by higher zinc & lead LME prices and rupee depreciation.

Zinc volume was down 5% and lead & silver volumes were both down 21% each. This was mainly due to lack of operator availability in view of second wave of COVID-19. Zinc LME prices were sequentially up 6%, while lead prices were up 5%.

Zinc cost of production before royalty (COP) during the quarter was $1,070 (Rs 78,952) per ton, higher by 5% YoY, (up 3% in INR terms and sequentially, it was up 13% in USD terms and up 14% in INR terms). The increase in COP is primarily due to surge in input commodity prices.

Sequentially, there was an increase in coal and diesel prices, cement prices as well as higher power costs coupled with lower volumes leading to an upward pressure on COP which was only partly offset by higher sulphuric acid credits and lower met coal cost.

EBITDA for the quarter soared to Rs 3,558 crore, up 123% YoY and down 8% sequentially. Year-on-Year EBITDA was up on account of higher Zinc Lead LME and increase in Silver prices as well as higher metal premiums. Sequentially EBITDA was lower on account of lower revenue, and higher costs.

The company's net investments and cash & cash equivalents as at end of 30 June 2021 was Rs 17,249 crore as compared to Rs 15,130 crore at the end of the fourth quarter (Mar'21) and was invested in high quality debt instruments.

Hindustan Zinc maintained its guidance on operational & financial metrics for the fiscal year 2022. Both mined metal and finished metal production in FY2022 is expected to be c.1025-1050 KT each.

FY2022 saleable silver production is projected at c.720 MT. Zinc cost of production in FY2022 is expected to remain below $1000 per MT. The project capex for the year is expected to be approximately US$100 million.

In light of rising input commodity prices, management is closely monitoring the situation and taking all necessary actions to combat it,” the company said in a statement.

Arun Misra, CEO, said: “We delivered highest-ever Q1 ore, refined metal & silver production. After exiting at a run-rate of 1.2 mtpa in fiscal year 2021, we maintained the momentum of production in Q1 with Year-on-Year growth of 15% in ore, 17% in refined metal & 37% in silver inspite of the spurt in COVID cases in the second wave of the pandemic.

Vinaya Jain, Sr. VP & Head Finance, said: We delivered our best ever Q1 Revenue, EBITDA and Profit after tax (PAT). Our strong balance sheet enables us to make proactive investments in operations and digitalization that will further enhance our mining output. We do recognize the headwinds from rising input commodity prices and are doubling our efforts to address them through long lasting structural cost initiatives.”

Hindustan Zinc is an integrated producer of zinc, lead and silver. The scrip fell 1.80% to end at Rs 327 on the BSE.

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