Profit Sheets

Hindustan Zinc Ltd: Firm realisations cushion Q1 performance despite covid impact

July 23, 2021 01:51 PM

Hindustan Zinc Ltd; Firm realisations cushion Q1 performance despite covid impact
Hindustan Zinc Ltd reported a decent June quarter performance despite the impact of the second wave of covid. Firm base metal prices helped

Hindustan Zinc Ltd reported a decent June quarter performance despite the impact of the second wave of covid. Firm base metal prices helped offset rising costs and the sequential decline in production. The stock was up more than 2% in early trade on Friday.

Mined metal production at 221,000 tonne rose 9% year-on-year on a low base, but declined 23% sequentially. Consequently, zinc and lead productions were down 4% and 21% sequentially respectively but were 20% and 9% higher year-on-year. Even silver production declined 21% sequentially.

Support came from zinc prices that averaged $2916 a tonne on the London Metal Exchange (LME) and were up 49% year-on-year and 6% sequentially. Lead prices rose 27% year-on-year and 5% sequentially. Silver prices at $26.7 an ounce, rose 63% year-on-year and 2% sequentially.

Also Read: India overhauls petroleum reserve policy to strengthen private interest

Better realisations cushioned the sequential decline in revenues at Rs6531 crore. Revenues were down 6% sequentially but 63.7% higher year-on-year on a lower base.

The cost of production, however, saw a steep surge with prices of coal, diesel and other commodities rising sharply. Zinc production cost surged 5% year-on-year to $1070 a tonne (up 13% sequentially). In rupee terms, it stood at Rs78,952 a tonne, up 3% year-on-year and 14% sequentially.

Since the management is targeting a cost below $1,000 a tonne in FY22, the cost trajectory moving forward will be watched. Management said it is working on efficiencies at power plants and other measures to keep costs at desired levels. Ebitda declined 8% sequentially to Rs3558 crore.

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