Hindustan Zinc Q1 Results Preview: Profits Expected to Rise by 15%, Margins to Expand

Synopsis : Hindustan Zinc Ltd is expected to report a robust Q1 FY25 performance, with profit growth up to 15% YoY and an expansion in EBITDA margins, driven by higher zinc and silver prices. However, challenges such as rising production costs and market volatility could impact the overall outlook.

Hindustan Zinc Ltd (HZL) is set to announce its financial results for the quarter ending June 30, 2024. Analysts are anticipating a positive performance, with profits expected to rise by up to 15% year-on-year (YoY). Key drivers for this growth include higher zinc and silver prices, which are likely to contribute to an expansion of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins.

Expected Performance Highlights

Brokerage firms have estimated that HZL’s revenue will show a double-digit increase YoY. However, quarter-on-quarter (QoQ) growth may remain muted due to seasonal factors and market volatility. EBITDA margins are projected to expand by 250-300 basis points, driven by higher metal prices and operational efficiencies.

For instance, Kotak Institutional Equities expects HZL to report a revenue of ?8,120.9 crore for Q1 FY25, reflecting an 11.5% YoY increase and 7.6% QoQ growth. They also foresee a 19% YoY jump in EBITDA to ?3,976 crore, with margins improving to 49%. Meanwhile, Phillip Capital predicts revenue at ?8,038.8 crore, up 10% YoY, and EBITDA margins at 48.8%, showing an increase of 280 basis points YoY.

Analyst Ratings and Market Performance

Despite these optimistic projections, the company has faced some challenges, including higher production costs and volatile market conditions. For example, the zinc cost of production has risen significantly, influenced by factors such as higher coal prices. However, the overall outlook remains positive, with analysts like JM Financial maintaining a 'buy' rating on HZL shares due to expectations of higher realizations and margin improvements.

On the market front, HZL shares have experienced some volatility. Recently, the stock fell by approximately 2.4% during a trading session, although it has gained nearly 125% from its 52-week low in March 2024.

Disclaimer:The information provided here is based on analyst estimates and should be considered for informational purposes only. Market conditions are subject to change, and actual results may vary.