During the quarter, the company’s net profit increased 36 per cent year on year (YoY) at Rs 2,198 crore against Rs 1,620 crore in the Q3FY20. Total revenue grew 29 per cent YoY at Rs 6,033 crore. EBITDA (earnings before interest, taxes, depreciation, and amortization) margin improved 519 basis points (bps) at 54 per cent from 49 per cent in a year ago quarter.
The management has guided zinc cost of production to remain below $1000 per MT for the year. Furthermore, the management has also guided both mined metal and finished metal production in FY21 to be at 925-950 KT each while saleable silver production is projected at ~650 tonne.
Driven by continued strong performance, the management is confident to achieve mined mineral and refined metal volume guidance, while likely to exceed the company’s guidance on silver production and cost of production for FY21.
In the past one month, the stock has rallied 25 per cent, as compared to 9 per cent gain in the S&P BSE Sensex, till Wednesday. It hit a 52-week high of Rs 328 on January 7.
The stock trades at 6.7x our FY22 EV/EBITDA estimate, which analysts at Emkay Global Financial Services believe captures any upside in the near term. However, a dividend yield of 7.4 per cent supports valuations. The brokerage firm believes that strong dividend declaration will continue due to the leverage at the promoter entities. This will ensure the stock remains attractive on the dividend yield even at the current price.
“We maintain Hold on the stock. The key upside risk to our call is stronger-than-expected global recovery, which will drive commodities prices up and higher-than-estimated sales tonnages,” it said in result update.