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TRANSCRIPT
Hindustan Zinc Ltd.
BUY
- 1 of 22 - Monday 1st June, 2015
This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.
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Target Price 217 CMP 168 FY17E EV/EBITDA 3.3x
Index Details Hindustan Zinc Limited (HZL) is a leading zinc producer in India and 2nd largest zinc lead miner globally with 10 Mn MT of ore production capacity currently. It owns the world’s largest zinc mine i.e Rampura Agucha which boasts of high quality reserves and resources grade. HZL’s key strengths include:
Mine life of 25 years with 375 Mn MT of Reserves and Resources.
Debt –free coupled with high operating margins of ~50%.
High cash and cash equivalents reserves worth ~Rs 27,250 crores as of FY15.
We are positive on the company given that:
Global supply deficit of Zinc and closure of major mines will ensure firm and stable prices for the foreseeable future. With Zinc revenues contributing ~80% HZL’s revenues and zinc mined metal production capacity expected to increase to 1.2 Mn Mt (from 0.9 Mn MT), HZL enjoys a near monopoly in India and is one of the world’s lowest cost producers of zinc.
A narrowing but persistent deficit in lead is expected to keep the lead prices firm. With the sectoral consumption for lead in India expected to remain high and India being a net importer of lead, demand for lead is expected to remain stable. Thus, combined with increased mined metal production, revenues from lead are expected to grow, benefitting HZL.
Silver accounts for ~7% of HZL’s revenues and its volumes are expected to increase in tandem with the volumes of lead and zinc. With silver demand for industrial applications in solar and electronics on the rise, it is expected to remain in deficit in the coming years resulting in steady prices.
With a high quantum of surplus liquid investments, HZL generated other income worth Rs. 2821 crores in FY15; other income is expected to grow steadily in the coming years.
Sensex 27,849
Nifty 8,433
BSE 100 8,536
Industry Zinc
Scrip Details
Mkt Cap (Rs cr) 70,816
BVPS (Rs) 101
O/s Shares (Cr) 422.5
Av Vol (Lacs) 0.6
52 Week H/L 190/128
Div Yield (%) 2.1
FVPS (Rs) 2
Shareholding Pattern
Shareholders %
Promoters 70.9
DIIs 8.9
FIIs 1.9
Public 18.3
Total 100.00
HZL vs. Sensex
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Key Financials (Rs in Cr)
Y/E Mar Net
Sales EBITDA PAT
EPS (Rs)
EPS Growth (%)
RONW (%)
ROCE (%)
P/E (x)
EV/EBITDA (x)
2014 13636 6962 6905 16.3 0.1 19.8 20.0 10.3 6.5
2015E 14788 7420 8178 19.4 18.4 20.2 18.4 8.7 5.5
2016E 18630 8157 8595 20.3 5.1 18.5 17.5 8.3 4.5
2017E 21531 9127 9602 22.7 11.7 18.1 17.2 7.4 3.3
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June, 2015
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We initiate coverage on Hindustan Zinc as a BUY with a Price Objective of Rs. 217, representing a potential upside of ~30% over a period of 24 months. At the CMP of Rs. 168, the stock is trading at 3.8x its EV/EBITDA for FY17E. We have arrived at the target price using the DCF method over the next 25 years i.e., its existing mine life.
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June, 2015
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Company Background
HZL (erstwhile Metal Corporation of India) was incorporated in 1966 as a Public Sector undertaking. In April 2002, Vedanta acquired 46% stake in the company through a divestment program undertaken by the GOI (26% from the GOI and the remaining portion from an open offer). Post this, the group acquired an additional 18.9% in the company in 2003 taking the holding to 64.9%. Currently GOI holds 29.5% stake in the company as of March 2015.
HZL is India’s leading producer of zinc, lead and silver. It currently has a production capacity of 0.9 million MT of mined metal and plans to expand this to 1.2 million MT. The mining and smelting operations of the company are entirely centred in the State of Rajasthan.
Revenue Break-down
Products Revenue Share Description
Zinc 78
Special High Grade (LME Registered) -
HZL SHG - 99.995,
Vedanta SHG - 99.995,
Continuous Galvanizing Grade,
Prime Western,
High Grade
Lead 13 Vedanta 99.99
Silver 7 Silver 99.99
Wind power 1 274 MW Capacity
Others 1 Sulphuric Acid and Cadmium
Source: Ventura Research
Location of Mines and Smeltors
Source: Ventura Research
Location of Wind Power Plants
Source: Ventura Research
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Key Investment Highlights Global dynamics, adequate resources and operating efficiencies augur
well for the long run
Demand for zinc and lead expected to be robust globally
With demand expected to increase at 3% over the next 5 years, and supply
deficit to persist, zinc prices are expected to firm upto $2600/MT by FY17 from
current $2300/MT levels.
Global deficit expected in Zinc
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Mine Production Slab production Consumption Surplus/(Deficit)
'000 tonnes Deficit Tonnes
Source: Bloomberg, USGS, Ventura Research Supply deficit clearly portends firm future prices for zinc
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Source: Bloomberg, HZL, Ventura Research a Research
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India – China bulk consumption to fuel demand
This demand is driven by two of the world’s largest economies, notably China
(which has historically been in deficit) and India (where demand growth is
expected to accelerate).
Bulk of the usage is from the auto sector and the steel industries, and both are expected to do well in India and China.
Auto and Steel Account for >80% of Demand
Source: Ventura Research
India China Account for >50% of Demand
Source: Bloomberg, Ventura Research
China Auto Sales on an uptrend
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Source: CAAM, Ventura Research
China Zinc been in deficit since the past five years
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Mined Zinc Supply Zinc Slab Demand
China Zinc Exports (RHS) China Zinc Imports (RHS)
'000 MT '000 MT
Source: CAAM, Ventura Research
Bulk consumption sectors are Steel (Anti Corrosive and Bonding) and Auto (Die casting Alloys)
India and China account for majority of zinc demand
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Mine closure to accentuate pressure on supply
The supply deficit is further accentuated by the fact that mines aggregating to
1.8 Mn MT of Zinc MIC are set for closure permanently and new mines are not
expected to add to the production until FY18.
India Steel Demand to grow at 5.2% CAGR to 102.5 Mn MT by FY17
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Source: Ministry of Steel, CMIE, Ventura Research
India Auto sales to grow at 13% CAGR to 6.2 Mn vehicles by FY17
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Production Sales % Production Growth % Sales Growth
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Source: SIAM, CMIE, Ventura Research
Upcoming Mines
Mine Country Production Resources Zn Grade
Dugald River Australia 450000 63 Mn MT 13%
Mc Arthur Expansion Australia 383000 110 Mn MT 7%
Gamsberg South Africa 200000 214 Mn MT 6%
Izok Corridor Canada NA 29 Mn MT 13% Source: Ventura Research, Online Sources
Major Mines set for Closure
Mine Area Company 2014 Zinc
Century Mine Australia MMG 466000
Lisheen Mine Ireland Vedanta 165000
Skorpian Namibia Vedanta 150000
1800000Total (Incl. Others) Source: Ventura Research, Online Sources
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Lead supply deficit to contract; prices to remain stable
LME prices for lead are expected to remain flattish over the forecast period
given the narrowing deficit on the back of increasing recycled and mined
metal production.
World Lead Trends
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Recycled Lead (Deficit)/Surplus
Tonnes Tonnes
Source: Bloomberg, Ventura Research LME lead prices to remain flat
Source: Bloomberg, Ventura Research
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(Deficit)/Surplus LME Lead $
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June, 2015
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Demand prospects of industrial batteries hinges on the overall macro
economic situation. A revival in the capex cycle, coupled with the on-going
power supply issues in large parts of India, is bound to drive the requirement
for back-up power. Historically, the market for industrial batteries has grown
at a CAGR of 20 % and is expected to clock a similar growth rate in the
coming years.
A large part of the demand for automotive batteries demand stems from
replacement demand, since the typical life of a battery is 2-3 years,
depending on the extent of usage. Given that 3-3.5 mn vehicles are sold
annually in India, the replacement demand is expected to remain robust.
Zinc and Lead form ~87% of sales for HZL and the above indicates that the demand and prices for zinc are expected to remain robust while for lead it suggests steady price. This augurs well for HZL.
Auto and Industrial batteries form >75% of the demand
Source: Ventura Research
India and China form >55% of the demand
Source: Bloomberg, Ventura Research
Auto (SLI) and Industrial Batteries form majority of zinc demand
India and China are major lead consumers
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Adequate resources lead to long term visibility
HZL has a current Reserves & Resources (R&R) base of 375.1 Mn MT which
translates to a mine life of 25 years leading to long term sustainability of
revenues.
Sharply lower cost of production implies good profitability
HZL is set to benefit from operating efficiencies in the long run as it is one of
the lowest cost producers globally. This will help maintain higher margins
compared to peers, both in up and down economic cycles.
HZL’s has adequate reserves and resources
Site
Mining Site (MN. MT) Reserve Resource Zinc% Lead% Silver g/ton
Rampura Agucha 57.5 51.9 13.7 1.8 58
Sindesar Khud 20.4 78.7 4.6 2.6 100
Rajpura Dariba 10 44.3 6.4 1.6 90
Zawar 9.9 68.5 3.8 1.9 55
Kayad 6.2 1.5 10.4 1.5 13
Bamnia Kalan 10.9 3.8 1.7 55
Current Metal In Concentrate
Source: HZL, Ventura Research
HZL is amongst the lowest cost producers of zinc
Source: Wood Mackenzie, HZL, Ventura Research
Cash COP Zinc – ex Royalty & DMF Contribution
698
632
834 835 837870 876 865
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COP - INR COP - $
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Source: HZL, Ventura Research
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Further, HZL’s Rampura Agucha mine, the world’s largest zinc mine, also
boasts of high quality zinc content with Grades of 13.7% Metal in Content
(MIC) which ensures lower cost of production.
Revenue growth to bolster on mining expansion and capex
The company plans to double its ore production capacity from the current
10.6 mn MT currently to 21.35 mn MT by FY18. The total capex to be
incurred for the mining expansion is ~ Rs 9500 crores.
Doubling of Ore Production Capacities on the cards
Mine (Mn MT)Old Production
CapacityAddl Capacity
New Production
Capacity
Rampura Agucha 6.15 0 6.15
Sindesar Khud 2 1.75 3.75
Rajpura Dariba 0.9 0.3 1.2
Zawar 1.2 3.8 5
Kayad 0.35 0.65 1
Bamnia Kalan 0.5 0.5
RAM UG 3.75 3.75
Total 10.6 10.75 21.35
Source: HZL, Ventura Research
Mined Metal Production to grow at 17% CAGR by FY 17
Source: HZL, Ventura Research
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Mined Metal Production Zinc Mined Production
Lead Mined Production
Tonnes
HZL’s Rampura Agucha mine boasts of a high grade of zinc content
17%15%
14%
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2014 Zinc Zn Grade%
'000 MT
Source: Ventura Research
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June, 2015
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New licenses to add to future reserves … HZL has applied for new mining licenses under the recently amended MMDR
Act (The act introduces the concept of a Prospecting License (PL) and the
subsequent Mining License). HZL has applied for 34 PLs and 4 MLs. We
believe HZL is in a favorable position to receive at least 20 PLs given its
successful operations in the existing areas of the PLs.
The licenses for which it has applied are spread across the states of
Rajasthan, Madhya Pradesh and Gujarat.
… consequently resulting in increasing revenues Given the increased mined metal production and favourable global demand
supply dynamics, we expect HZL’s revenues to grow at a two year CAGR of
20% to Rs 22,264 (Gross) crore by FY17, higher than the historical CAGR of
11%. The revenue growth will be driven by:
19.9% 2 year CAGR in zinc revenues to Rs 17,723 crore by FY17
7.3% 2 year CAGR in lead revenues to Rs 2,351 crore by FY17
15.4% 2 year CAGR in silver revenues to Rs 1,581 crore by FY17
Zinc expansion to bolster Revenues and Profitability
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Zinc Revenues Lead Revenues Silver Revenues Others
Rs. Crs.
The proportion of zinc revenues is expected to increase from 79% in FY15 to 84% in FY17.
Source: HZL, Ventura Research
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Zinc revenues to accelerate on higher volumes and LME prices
We expect zinc revenues to grow at a 2 year CAGR of 26% to Rs 19,626
crore by FY17. The revenue growth will primarily be volume driven led by
increase in mined metal production, and hence refined metal production, as
explained earlier. Firming up of LME prices with a widening deficit situation is
also expected to boost revenues.
HZL will remain the largest producer of zinc in India. HZL’s market share has
consistently increased from 72% in FY 2010 to 84% in FY 2014, implying that
it has serviced incremental demand arising in India. Also, given the fact that
HZL is planning to expand its capacities, it is well poised to meet additional
demand arising from higher infra spend.
Indian Zinc Trends
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Source: Ministry of Commerce, Bloomberg, Ventura Research
HZL Trends
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Hindustan Zinc Production HZL Domestic Zinc Sales
HZL Export Zinc Sales % Domestic Sales/Demand
Tonnes %
Source: Ministry of Commerce, Bloomberg, Ventura Research
Zinc Revenues
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Source: HZL, Ventura Research
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Lead revenues to grow at a tepid pace
We expect lead revenues to grow at a CAGR of 7.3% to Rs 2,351 crore by FY17.
The revenue growth is expected to be subdued as LME lead prices are expected
to remain flat owing to narrowing deficit in 2016. However, the deficit is expected
to widen marginally in 2017 which will firm up prices. The proportion of lead
revenues is expected to reduce from 13% in FY15 to 10% in FY17.
Silver revenues to grow at a robust pace
We expect silver revenues to grow at a 2 year CAGR of 15% to Rs 1,580 crore
driven by 10% CAGR in volumes to 395 MT by FY17. Silver, being a by-product
of zinc and lead, will grow in tandem with the zinc and lead production volumes.
The proportion of silver revenues is expected to be stable at ~7%. The current
LBMA price of silver is $17.5/oz, and we have assumed them to remain the same
Lead Revenues
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Lead Refined Production
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Source: HZL, Ventura Research
Silver Revenues
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Silver Refined Metal Production
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Source: HZL, Ventura Research
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Silver is not only an investment metal but also its industrial usage is growing rapidly as it finds increased usage in sunrise sectors like solar energy, electronic equipments and other modern applications. This will ensure that silver pricing remains steady.
Key Risks
Development of New Mines We have incorporated a gradual rise in zinc prices owing to the deficit situation. However, if the new mines commence operations earlier than anticipated, it will enhance the supply thereby putting downward pressure on prices and impacting our revenue forecasts.
Inability to achieve estimated production HZL is increasing its ore capacities and aims to achieve a mined metal production of 1.2 Mn MT by FY17-FY18. Inability to meet the estimated production and ramp up its smelter capacity for the same, could impact its profitability and cash generating abilities.
Slowdown in domestic economy Domestic sales form ~80% of HZL’s revenues. The realizations are also relatively higher than that of in export markets. Hence, a slower than anticipated recovery in domestic economy will hit the demand for zinc, lead and silver, HZL’s primary products.
Inability to generate higher yield on investments HZL currently generates substantial investment income i.e. Rs. 2821 Crores in FY15 (16% of revenues) from its investments worth Rs. 27254 Crores parked in mutual funds, bonds and other high quality debt instruments. A lower than anticipated yield on investments will impact our profit estimates.
World Silver trends
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Total Supply Total Demand Surplus/(Deficit)
Tonnes
Source: Silver Institute, Ventura Research
Silver Price vis-à-vis Surplus/Deficit
Source: Silver Institute, Ventura Research
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Surplus/(Deficit) Avg Silver London price
MT $/Ounce
Price fell in 2013 despite the deficit as global investorsliquidated their silver investments
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Currency movements The LME prices of zinc and lead, the determinant of HZL’s realizations, are quoted in dollars. A sharp appreciation of the dollar will directly impact HZL’s realizations.
Financial Performance
In Q4FY15, HZL reported a 13% Y-o-Y increase in revenues to Rs 4125.7
crores. EBITDA grew 12.7% Y-o-Y to 1978.4 crores in Q4FY15; EBITDA margin
remained flat Y-o-Y at 48.0%. PAT grew 6.2% Y-o-Y to 1997.4 crores; PAT
margin contracted 320 bps to 48.4% due to marginal decline in its commodity
prices, higher finance and tax expenses and lower other income.
Quarterly Performance (Rs. Crores)
Particulars Q4FY15 Q4FY14 FY15 FY14
Net Sales 4125.7 3642.7 14787.8 13636.0
Growth 13.3 8.4
Total Expenditure 2147.3 1887.5 7368.8 6674.5
EBITDA 1978.4 1755.2 7419.0 6961.5
Margin % 48.0 48.2 50.2 51.1
Depreciation 26.8 204.1 644.2 784.6
EBIT (Excl. OI) 1951.6 1551.1 6774.8 6176.9
Other Income 594.9 588.7 2821.1 1899.4
EBIT 2546.5 2139.8 9595.9 8076.3
Margin % 61.7 58.7 64.9 59.2
Finance Costs 13.8 20.2 23.5 44.9
Exceptional Income 0.0 0.0 -2.8 -61.7
PBT 2532.7 2119.6 9569.5 7969.7
Margin % 61.4 58.2 64.7 58.4
Tax Expense 535.3 238.3 1392.1 1065.1
PAT 1997.4 1881.3 8177.4 6904.6
Margin % 48.4 51.6 55.3 50.6 Source: HZL, Ventura Research
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Financial Outlook The company reported a 8% YoY revenue growth to Rs. 14,788 crores in FY15.
Going forward, we expect the company to clock a 14% CAGR in revenues over
FY15-FY17 led by higher mined and refined production coupled with a steady
rise in zinc realizations.
The company enjoys a healthy EBITDA margin of ~50% currently. However,
operating margins are expected to contract on account of huge upcoming
District Mineral Fund (DMF) contribution. The DMF payment will be a maximum
of 100% of royalty on existing mines. Hence, on a conservative basis, based on
100% of royalty payout, the DMF payment could be in the tune of Rs. 1738
crores in FY17. Consequently, EBITDA margin could shrink by 7 pps to 43% in
FY17.
The company has huge cash reserves and invests ~45% of the operating cash
flow that it generates in various current investments such as mutual funds,
bonds and other high rated debt instruments. As on FY15, it had current
investments worth Rs. 27,254 Crores. We expect other income to continue to
form 14% of revenues over FY15-FY17. Accordingly, given the quantum of
other income, the net profit of the company is likely to be higher than the
operating profit, a phenomena witnessed in FY15 as well. The ROE for the
company is expected to gradually drop to 17% in FY17 from 20% currently. The
company will continue to remain debt free.
EBITDA and EBITDA margins
0
10
20
30
40
50
60
0
5000
10000
15000
20000
25000
20
11
20
12
20
13
20
14
20
15
20
16
E
20
17
E
Revenues EBITDA EBITDA margins (RHS)
Rs. Crs %
Source: HZL, Ventura Research
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Current Investment and Other Income
866
1543
20031899
2821 28163193
0
500
1000
1500
2000
2500
3000
3500
0
5000
10000
15000
20000
25000
30000
35000
40000
20
11
20
12
20
13
20
14
20
15
20
16
E
20
17
E
Current Investments Other Income
Rs. Crs. Rs. Crs.
Source: HZL, Ventura Research
PAT and PAT margins
0
5
10
15
20
25
30
35
40
45
50
0
2000
4000
6000
8000
10000
12000
20
11
20
12
20
13
20
14
20
15
20
16
E
20
17
E
PAT PAT margins (RHS)
Rs. Crs. %
Source: HZL, Ventura Research
ROE
0
5
10
15
20
25
30
20
11
20
12
20
13
20
14
20
15
20
16
E
20
17
EROE
%
Source: HZL, Ventura Research
Current Investment and Other Income
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2011
2012
2013
2014
2015
2016E
2017E
Cash Flows from Operations Investment
Rs.Crs.
Source: HZL, Ventura Research
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Valuation
We have valued Hindustan Zinc based on the DCF methodology with projections
from FY16-FY40. The projection period of 25 years is based on HZL’s expected
mine life. We have modeled HZL’s financials based on management and industry
interactions.
We initiate coverage on HZL as BUY with a Target Price of 217 showing a
potential upside of 30% on the CMP of Rs. 168. Our target price implies an FY17
EV/EBITDA multiple of 5.6x.
Key Assumptions:
Ore Producing Capacity: Given that the company is ramping up its ore production capacity, we have assumed that HZL will have a total ore producing capacity of 21.35 Mn MT post the commissioning of the new mines.
Mined Metal Production: The company’s mined metal production is estimated to surge to 1.2 Mn MT in FY17, from 0.9 Mn MT in FY15 backed by higher ore produced. The mined metal production is expected to increase with the gradual expansion of HZL’s R&R.
LME Zinc and lead prices: LME Zinc prices are expected to increase gradually due the foreseen deficit. Accordingly, we expect LME zinc prices to increase to $3000 by FY 2020. LME lead prices are expected to increase gradually in the wake of marginal deficit which could persist.
Contribution to District Mineral Fund: As per the new MMDR Act, HZL could have to pay a maximum of 100% on royalty. On the same lines, we have conservatively factored the DMF payout at the rate of 100% on royalty.
Gross margins (excluding DMF payout and royalty): Gross margins are expected to peak at 59% in FY17 from 57.5% in FY15 driven by higher LME zinc prices. Post which, we expect margins to gradually moderate over the forecasted period.
Capex: We have assumed the company to incur a capex of around Rs. 9500 crores from FY16-FY20 to fund its expansion plans.
Wind Energy: We have assumed the Plant Load Factor of Wind energy to remain at 18% over the projected period.
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Other Income: The yield on current investments is assumed at 9%.
Addition to Current Investments: Considering the company’s historical trend, we have assumed that ~45% of each year’s cash flows generated from operating activities would be further re-invested into current investments.
HZL has attractive valuations compared to global peers
MMG LTD P/E P/E EV/EBITDA EV/EBITDA EV/Sales EV/Sales
Period Current 1 yr Forward Current 1 yr Forward Current 1 yr Forward
BHP Billiton Ltd 9.97 17.23 5.12 6.82 2.41 2.99
Glencore International 15.68 19.86 8.43 9.06 0.51 0.59
Southern Copper Corp 20.65 21.58 10.78 11.54 5.19 5.25
Anglo American PLC 10.56 16.88 5.53 7.27 1.52 1.67
Teck Resources Ltd 22.02 19.55 6.98 6.94 2.12 2.12
Lundin Mining Corp 19.87 13.13 13.54 5.37 4.93 2.37
Vedanta Resources PLC 20.89 NA 5.31 6.66 1.90 1.93
Hudbay Minerals, Inc NA 19.37 35.35 8.58 6.22 3.08
Kazakhmys PLC 29.84 1297.37 10.06 22.90 3.36 3.47
MMG LTD 22.61 NA 11.90 18.32 4.66 5.40
Independence Group NL 20.92 14.11 6.66 5.20 3.17 2.47
Korea Zinc Co Ltd 18.59 NA 9.88 NA 1.95 2.00
Nyrstar loss 20.11 6.51 4.52 0.55 0.46
BolIden 28.65 11.85 10.14 6.09 1.55 1.33
HINDUSTAN ZINC 8.70 10.40 5.43 4.78 2.77 2.58
Source: HZL, Ventura Research
Key DCF Assumptions
Source: Ventura Research
Source: Ventura Research
Projection Period FY16-FY40
Cost of Equity 15.98
Risk Free rate 8
Beta 1.03
RM 15.75
Risk Premium 7.75
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P/E
0
50
100
150
200
250
300
Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14
CMP 6X 7.575X 9.15X 10.725X 12.3X
Source: HZL, Ventura Research
EV/EBITDA
0
10000
20000
30000
40000
50000
60000
70000
Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14
EV 2X 3.55X 5.1X 6.255X 7.805X
Source: HZL, Ventura Research
P/BV
0
50
100
150
200
250
300
350
400
450
Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14
CMP 0.8X 1.625X 2.45X 3.275X 4.1X
Source: HZL, Ventura Research
EV/Sales
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14
EV 1X 1.75X 2.50 3.25X 4X
Source: HZL, Ventura Research
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Financials and Projections
Y/E March, Fig in Rs. Cr FY 2014 FY 2015 FY 2016e FY 2017e Y/E March, Fig in Rs. Cr FY 2014 FY 2015 FY 2016e FY 2017e
Profit & Loss Statement Per Share Data (Rs)
Net Sales 13636.0 14788.4 18629.9 21530.9 EPS 16.3 19.4 20.3 22.7
% Chg. 8.5 8.5 26.0 15.6 Cash EPS 13.1 17.0 14.9 18.5
Total Expenditure 6674.5 7368.8 10472.9 12403.7 DPS 3.50 4.40 4.90 5.40
% Chg. 10.4 10.4 42.1 18.4 Book Value 87 101 115 132
EBITDA 6961.5 7419.6 8157.0 9127.2 Capital, Liquidity, Returns Ratio
EBITDA Margin % 51.1 50.2 43.8 42.4 Debt / Equity (x) 0.0 0.0 0.0 0.0
Other Income 1899.4 2821.1 2817.6 3195.0 Current Ratio (x) 11.0 10.9 11.1 11.5
Exceptional items 61.7 2.8 0.0 0.0 ROE (%) 19.8 20.2 18.5 18.1
PBDIT 8799.2 10237.8 10974.6 12322.2 ROCE (%) 20.0 18.4 17.5 17.2
Depreciation 784.6 644.2 805.5 958.5 Dividend Yield (%) 2.1 2.6 2.9 3.2
Finance Costs 44.9 23.5 57.8 66.8 Valuation Ratio (x)
PBT 7969.7 9570.1 10111.4 11296.9 P/E 10.3 8.7 8.3 7.4
Tax Provisions 1065.1 1392.1 1516.7 1694.5 P/BV 1.9 1.7 1.5 1.3
Reported PAT 6904.6 8178.0 8594.7 9602.4 EV/Sales 3.5 2.9 2.1 1.6
Minority Interest 0.0 0.0 0.0 0.0 EV/EBIDTA 6.5 5.5 4.5 3.3
Share of profit from associate 0.0 0.0 0.0 0.0 Efficiency Ratios
PAT 6904.6 8178.0 8594.7 9602.4 Inventory Days 73.0 68.0 59.8 57.4
PAT Margin (%) 50.6 55.3 46.1 44.6 Debtors Days 10.7 16.3 11.0 11.0
Prodn. Based Costs/Sales (%) 32.7 28.2 32.4 31.6 Creditors Days 31.1 35.4 25.2 24.2
Balance Sheet Cash Flow statement
Share Capital 845.1 845.1 845.1 845.1 Profit Before Tax 7969.71 9570.12 10111.39 11296.91
Reserves & Surplus 36572.6 42508.0 48767.7 55700.7 Depreciation & Amortisation 784.6 644.2 805.5 958.5
Other Long Term Liabilities 56.4 132.1 140.0 150.0 Working Capital Changes 190.5 282.0 -849.9 -190.1
Total Loans 0.0 0.0 0.0 0.0 Direct Taxes Paid & Others -3408.1 -3329.6 -3771.0 -4257.9
Deferred Tax Liability 1658.1 2515.3 3020.9 3585.8 Operating Cash Flow 5536.5 7166.7 6296 7807
Total Liabilities 39131.8 46000.5 52773.7 60281.5 Capital Expenditure -1774.2 -1623.3 -1488.5 -1532.5
Gross Block 13583.6 14989.5 16203.5 17502.0 Other Income Received 729.2 2821.1 2817.6 3195.0
Less: Acc. Depreciation 4436.6 4921.2 5554.0 6325.9 Others -6825 -6417 -5064 -5182
Net Block 9147.0 10068.2 10649.5 11176.1 Cash Flow from Investing -7869.8 -5219 -3734 -3519
Capital Work in Progress 1540.9 1382.7 1484.4 1531.9 Inc/(Dec) in Loan Fund 0.0 0.0 0.0 0.0
Investments 22506.4 27253.6 31309.9 35503.0 Interest Paid and Others -1577.4 -1945.1 -2294.1 -2609.5
Net Current Assets 2998.2 2464.7 3395.6 5137.3 Cash Flow from Financing -1577.4 -1945.1 -2294.1 -2609.5
Deferred Tax Assets 0.0 0.0 0.0 0.0 Net Change in Cash -3910.7 2.8 267.5 1678.6
Other Non-Current Assets 2939.4 4595.1 5698.0 6697.0 Opening Cash Balance 6942.1 3031.4 3034.2 3301.7
Total Assets 39131.8 45764.3 52537.5 60045.3 Closing Cash Balance 3031.4 3034.2 3301.7 4980.3
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Disclosures and Disclaimer Ventura Securities Limited (VSL) is a SEBI registered intermediary offering broking, depository and portfolio management services to clients. VSL is member of BSE, NSE and MCX-SX. VSL is a depository participant of NSDL. VSL states that no disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura Insurance Brokers Limited and Ventura Allied Services Private Limited are associates of VSL. Research Analyst (RA) involved in the preparation of this research report and VSL disclose that neither RA nor VSL nor its associates (i) have any financial interest in the company which is the subject matter of this research report (ii) holds ownership of one percent or more in the securities of subject company (iii) have any material conflict of interest at the time of publication of this research report (iv) have received any compensation from the subject company in the past twelve months (v) have managed or co-managed public offering of securities for the subject company in past twelve months (vi) have received any compensation for investment banking merchant banking or brokerage services from the subject company in the past twelve months (vii) have received any compensation for product or services from the subject company in the past twelve months (viii) have received any compensation or other benefits from the subject company or third party in connection with the research report. RA involved in the preparation of this research report discloses that he / she has not served as an officer, director or employee of the subject company. RA involved in the preparation of this research report and VSL discloses that they have not been engaged in the market making activity for the subject company. Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. We may have earlier issued or may issue in future reports on the companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. 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Similarly, this document does not have regard to the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this report may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for his/ her/their particular circumstances and, if necessary, seek professional/financial advice. And such person shall be responsible for conducting his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this document. The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company. These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not regard the inclusion of the projections and forecasts described herein as a representation or warranty by VSL, its associates, the authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the assumptions underlying such projections and forecasts. The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. 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The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of VSL and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection. This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its directors or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection therewith. The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Securities Market. Ventura Securities Limited
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