Lower production cost may support HZL margins

During the September quarter (Q2FY25), Hindustan Zinc's (HZL's) revenue was reported at ₹8,300 crore (up 22 per cent year-on-year or Y-o-Y, and 2 per cent quarter-on-quarter or Q-o-Q), marginally above consensus.

- DEVANGSHU DATTA

Operating profit stood at ₹4,100 crore (up 31 per cent Y-o-Y and 5 per cent Q-o-Q), also a small beat. The operating profit margin was 50 per cent, up from 48.5 per cent in Q1FY25.

Zinc cost of production (CoP) for Q2FY25 stood at $1,071 (₹89,686) per metric tonne (MT) (down 5 per cent Y-o-Y and 3 per cent Q-o-Q).

Higher volume, better linkage to coal availability and softer coal prices reduced costs. These could support margins, going forward.

The adjusted net profit stood at ₹2,400 crore (up 35 per cent Y-o-Y and flat Q-o-Q).

In August 2024, HZL declared an interim dividend of ₹19 per share. During H1FY25, revenues grew 16 per cent Y-o-Y, operating profit rose 24 per cent and adjusted net profit rose 29 per cent.

There was an exceptional item of ₹83 crore related to land tax provision of ₹27 crore and environment and health cell provision of ₹56 crore.