Hindustan Zinc slips after Q1 PAT declines 23% to Rs 1,359 cr

Hindustan Zinc fell 2.58% to Rs 182.95 after standalone net profit dropped 23% to Rs 1,359 crore on 20.83% decrease in revenue to Rs 3,898 crore in Q1 June 2020 over Q1 June 2019.

Hindustan Zinc's fall in revenues were primarily due to 29% Y-o-Y (year-on-year) and 8% sequential decline in Zinc LME prices, 11% Y-o-Y and and 9% sequential decline in lead LME prices, lower metal premium and COVID-19 impacted lower volume, partly offset by rupee depreciation.

Standalone profit before tax (PBT) dropped 28.97% to Rs 1,664 crore in Q1 June 2020 as against Rs 2,343 crore in Q1 June 2019. Total tax expense for the quarter slumped 47.23% at Rs 305 crore as against Rs 578 crore in Q1 June 2019. The result were announced during trading hours today, 21 July 2020.

EBITDA fell 36% to Rs 1,599 crore in Q1 June 2020 over Q1 June 2019 on account of lower revenue, contribution towards COVID-19 donations and one-time start up costs, partly offset by lower operating costs. The decline in EBITDA was partly offset by higher investment income primarily on account of mark-to-market gains due to favourable interest rate movement.

In its outlook, Hindustan Zinc stated that both mined metal and finished metal production in FY21 will be higher than last year and is expected to be between 925-950 kilo tonne (KT) each. FY2021 saleable silver production is projected at c. 650 million tonne (MT). Zinc cost of production in FY2021 is expected to remain below $1,000 per MT. The project capex for the year is expected to be in the range of $100-140 million.

As of 30 June 2020, the company's net cash and cash equivalents declined 28.32% to Rs 15,480 crore as compared to Rs 21,596 crore at the end of FY2020 and was invested in high quality debt and other fixed income instruments.

Commenting on the Q1 performance, Sunil Duggal, the chief executive officer (CEO) of Hindustan Zinc, has said that: "Our strong performance during these difficult times demonstrates the spirit and resilience of our people, who transformed a crisis into an opportunity. The resulting streamlining of our operations has also laid a strong foundation, which will have a lasting positive impact on our performance."

Hindustan Zinc is engaged in the mining and smelting of zinc, lead and silver metal in India. The firm's segments include mining and smelting of zinc, lead and silver, and wind energy.

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