Hindustan Zinc: Awaiting fresh triggers for earnings growth amid low demand

Analysts at HSBC, not expecting zinc prices to cross $2,200 in the foreseeable future, have reiterated "hold" rating given potential for volume growth and high dividend yield

Hindustan Zinc’s June quarter performance, as anticipated, was affected by the lockdown. Lower production days in April and reduced workforce availability because of restrictions saw mined metal production fall 5 per cent year-on-year (YoY) and 19 per cent sequentially to 202,000 tonne.

The per-tonne zinc price on the London Metal Exchange (LME) averaged $1,961 in Q1, down 29 per cent; the average lead price of $1,673 was 11 per cent lower YoY. The 8 per cent rupee depreciation YoY provided some respite but metal premia (over benchmark) were down.

Thus, zinc revenues (about two-thirds of top line) declined 27 per cent YoY,