Hind Zinc
This stock, along with Sesa Goa and Sterlite are the ones which lifted the sentiments and indices. The scrip closed 13% higher yesterday. World’s second largest producer of zinc, the stock is up on hopes that since all legal hurdles blocking stake sale have now been cleared, we could hear stake sale news from Govt in Hind Zinc and Balco very soon. The Govt holds a residual stake of 29.5% in the company, which is in the non-promoter category. The company, which is a subsidiary of the Vedanta group, through Sterlite Industries, holds 64.92% stake as at 30th June 2013. The Vedanta group has more than evinced its desire to buy the residual stake from the Govt but no decision could be made till this legal hurdle had not been cleared. Now that things are smoothened, one needs to wait and see how the Govt plans to sell its stake – either through the auction route or dilute stake to public or ask for a higher price of around Rs.160/share and sell it to Vedanta.
Meanwhile, the company had ended Q1FY14 on a higher note, with net profit coming in at Rs.1660 crore, up 5% (YoY). Rupee depreciation augurs well for the company and this is what helped boost the topline in Q1, which otherwise on the back of lower price realizations could have slumped. Total revenue was up 8%. EBITDA was up 6% at Rs.1506 crore.
All metals showed higher revenue – zinc was up 9%, lead by 18%, silver by 5% and wind power, which constitutes its ‘others’ wad down 14%. Total mined metal production rose 27%. The cost of production for zinc with royalty was up 2% per metric tonne but the same cost in US$ was down 1%. In terms of realizations, zinc was down 5% at Rs.1840/MT, lead was up 4% at Rs.2049/MT and silver was down 18% at Rs.23.1/oz. But for this sharp fall in silver prices, the numbers for Q1 for the company would have been much better.
As at 30th June 2013, the company had cash and cash equivalents of Rs 22,365 crore, out of which Rs 14,743 crore was invested in debt mutual funds, Rs 2,217 crore in bonds and Rs 5,398 crore was kept in fixed deposits with banks.
Looking ahead, as stated by our Editor, Mr.SP Tulsian, stake sale by Govt to Vedanta would be the best option. He says, “There is no point in selling in open market. I don’t think that there is appetite of Rs 14,000-15,000 crore even taking the present valuations in the market because that will decrease the value of the stake held by the government. Stay invested.”