Vedanta Group Stock HindZinc Recommended To Buy, New Target Rs 597 For 12-Months; 1,450% Dividends YTD

Vedanta Group-backed zinc stock, Hindustan Zinc is an attractive bet for potential gains of over 17% with a timeframe of 12 months. Hindustan Zinc dominates India's zinc market with a whopping 75% market share and is well-poised to capitalise on robust infrastructure-driven zinc demand, as per BP Wealth. Just like its parent company Vedanta, Hindustan Zinc also holds a strong record of dividend payouts. HZL is currently below Rs 510 levels.

Brokerage BP Wealth in its latest note, recommended BUY on Hindustan Zinc.

The brokerage's note said, "The company's strong Q1FY25 results, reporting revenues of Rs. 8,130 crores and a PAT of Rs. 2,358 crores, reflect the benefits of higher metal prices and improved production efficiencies, including a notable 7% year-on-year reduction in zinc cost of production to US$ 1,107 per tonne."

Also, HZL's innovative launch of EcoZen, Asia's first low-carbon green zinc, alongside a renewable power agreement with Serentica, enhances its sustainability profile, the brokerage pointed out.

According to BP Wealth, HZL who dominates India's zinc market with a 75% share, is well-positioned to capitalize on the country's robust infrastructure-driven zinc demand.

With ongoing expansions - including a 160,000-ton per annum roaster and a 510,000-ton per-annum fertilizer plant - both on track for commissioning and the recent commencement of activities at the Bamnia Kalan mine, HZL aims for a 5% to 7% growth in metal production and 3% to 5% growth in silver production this fiscal year, BP Wealth observed.

Thereby, on the valuation, BP Wealth said, "These strategic initiatives and HZL's financial strength make it an attractive investment opportunity in the mining sector. Thus, we give the stock a "Buy" rating based on the above factors. On the valuation front, we value the company based on 22.5x of FY26e earnings and arrived at a target price of Rs. 597 (15% upside from CMP) with a 12-month investment horizon."

Hindustan Zinc Share Price:

After market hours of October 10, Hindustan Zinc share price ended at Rs 508.45 apiece, up by 0.64% with a market cap of Rs 2,14,836.34 crore. The stock's 52-week high and low is at Rs 807 apiece and Rs 285 apiece.

Currently, Hindustan Zinc has a dividend yield of 2.56%, which is among the highest in large-caps and metal basket. In 2024, so far, Hindustan Zinc has delivered 1,450% dividends valuing to Rs 14.50 per share.

At the latest update, Hindustan Zinc stated that on Thursday, it received an Order from the Office of the Commissioner of Central Excise & Central Goods Service Tax Commissionerate confirming a penalty of Rs. 7,43,17,994 along with Tax demand and applicable interest. The issue pertains to the reversal of Cenvat Credit of inputs/input services used for effecting exempted and non-taxable supply during FY 2011-12 to June 2017.

HZL said, that considering the merits of the case, the Company intends to file an appeal before the Appellate Authority within the time-limit prescribed under the Excise Law. The Company is hopeful of a favourable outcome thereof and does not expect the said Order to have any material financial impact on the Company.

Hindustan Zinc is India's largest and the world's second-largest integrated zinc producer. With more than 50 years of operational experience, the company gives the highest priority to the safety of our people and the conservation of scarce natural resources through technology and innovation. With a total R&R base of 456.3 million tonnes and an average zinc-lead grade of 6.8%, the company's mine life is over 25 years. Also, Hindustan Zinc's fully integrated zinc operations currently hold around 75% market share in India's primary zinc industry. The company is the 3rd largest silver producer globally with an annual capacity of 800 MT.