Hindustan Zinc - BLACK GOLD !!
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1286
Printed Date: 21/Apr/2025 at 11:25pm
Topic: Hindustan Zinc - BLACK GOLD !!
Posted By: prosperity
Subject: Hindustan Zinc - BLACK GOLD !!
Date Posted: 13/Oct/2007 at 10:49am
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http://www.moneycontrol.com/india/news/press--market/hindustan-zinc-reports-13-increaselead-production/304571 - Last AGM Key Takeaways
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Replies:
Posted By: prosperity
Date Posted: 10/Nov/2007 at 2:10pm
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Basantji - Good Change ... I am enthused to hear these positive comments from you on a cyclical/commodity company !
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Posted By: prosperity
Date Posted: 10/Nov/2007 at 2:23pm
http://www.theequitydesk.com/forum/forum_posts.asp?TID=1329&PN=3 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=1329&PN=3
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Posted By: basant
Date Posted: 10/Nov/2007 at 2:31pm
What makes you think that I changed my view (investing strategy) in cyclicals, commodities. I was just indicating efficiency in terms of a management change (public to private) and nothing else. HZL was just one example. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prosperity
Date Posted: 10/Nov/2007 at 2:58pm
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Basantji,
Somewhere on this forum - someone has written - i don't recall who/where .. that ..
"We should not write off all cyclical stocks"
There are good fundamental stories in some of these cyclical business as well .. In the same article you are pointing to - it also mentions that Hind. Zinc is in 2nd phase of efficiency improvement - the good story is continuing ..
The change i am observing in you is - from earlier you used to write off all cyclicals stocks - to changing it to be more inclusive - by taking an instance of a cyclical stock - so what if its taken as an example !
I am posting below my fundamental analysis of Hindustan Zinc to further explain my point about its fundamental strength despite it being a cyclical.
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Posted By: prosperity
Date Posted: 10/Nov/2007 at 3:24pm
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There are several fundamental strengths of Hindustan Zinc, despite it being a cyclical -
1) It has ventured into developing its own captive power (and sell the excess) - This would further reduce its cost per tonne and become self reliant.
2) This is the only company that i have heard which pays more taxes than expenditure - when does this happen - it happens if the profit margins are as high as 50% or more ..
3) High prices of Zinc are sustainable for 2 reasons:
A) Zinc forms only 3% of galvanized steel cost - so even if zinc prices rises to 200% - then it means overall finalized steel cost rises to only additional 3%
B) Zinc has no replacement for galvanizing
4) Hind. Zinc charges per tonne at its Chandriya and other factory gates - the same prices which it would cost an indian consumer company to buy from LSE plus shipping charges from London to Chandriya - Almost Complete Monopoly type situation except that LSE determines the rates
Remember, manishdave's post stating that zinc at one place can be sold at a higher price at the same time than zinc at any other place ...
5) It takes 2-3 years to develop new mines ... So no new capacity worldwide for next 2 years atleast
6) And Demand have increased at significant pace owing to overall infrastructure dev. in asia (high cost can be sustained for reasons mentioned above in #3)
7) Very low floating shares held by public (around 5%) !
8) Trigger of govt stage sale (or Sterlite or public is being debated, other issues ongoing on this)
9) Trigger of delisting - if stake sale happens to Sterlite !!
10) Company has lots of cash and its putting it into good use - develop captive power (also reduces taxes - the second largest outflow other than profits, since initial investments becomes an expenditure and hence artificially reduces profit) - Also its increasing its capacity of zinc
11) Zinc is sold in concentrate form and solid zinc form - they have changed their mix to have more of the profitable ones - as part of first phase of efficiency drive
12) For couple of quarters, they show "zinc reserves" with them as closing stock. They bill the cost to make them as expenses - but since its unsold - the revenues does not get added - while there is NO inventory problem in Zinc as of now - Hind Zinc does it to artificially make it show it has had lower earnings per quarter - so that sterlite can get govt. remaining stake at lower prices (since mrkt price would not rise very high - if earnings are artificially moderated)
13) Enam covers this stock and is very bullish on it for past 1-2 years..
14) Hindustan Zinc also sells Lead - and its fundamentals are also same as Zinc
So in short, good fundamentals can exist in cyclicals also - and we should not write all cyclicals off - just because they are cyclicals
I was wanting to do this writeup for long - but Basantji's Question made me do this now - Thanks for that !
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Posted By: prosperity
Date Posted: 10/Nov/2007 at 3:41pm
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http://investinginindianequity.blogspot.com/2007/07/motilal-oswal-reports-on-hindustan-zinc.html - http://investinginindianequity.blogspot.com/2007/07/motilal-oswal-reports-on-hindustan-zinc.html
Tuesday, 31 July 2007
In the same Report they are Initiating coverage on Hindustan Zinc:
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Posted By: prosperity
Date Posted: 10/Nov/2007 at 3:47pm
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http://groups.google.com/group/dpstock/attach/6c0db439ce05bf30/Hindustan_Zinc.pdf?part=8 -
http://deadpresident.blogspot.com/2007/04/enam-abb-cadila-healthcare-cipla.html - ENAM on Hindustan Zinc (need 2 clicks)
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Posted By: prosperity
Date Posted: 10/Nov/2007 at 4:02pm
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See how the cost of production came crashing down: http://www.hzlindia.com/highlights.asp - http://www.hzlindia.com/highlights.asp
http://www.hzlindia.com/ass_loc.asp - http://www.hzlindia.com/ass_loc.asp
Superb Results: http://www.hzlindia.com/admin/newsroom/images/W000000001.pdf - http://www.hzlindia.com/admin/newsroom/images/W000000001.pdf
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Posted By: tigershark
Date Posted: 10/Nov/2007 at 8:47pm
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pl check on if china cools off due to a usa, japan slowdown what effect it will have on zinc and commodity prices in general.although at the presnt there are no signs of china slowing down ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: shivkumar
Date Posted: 16/Nov/2007 at 5:02pm
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Ran through the analysis here with a former employee of the Vedanta group. He told me Hindustan Zinc is an evergreen stock. A couple of years back he advised me to buy sterlite and somehow it skipped my mind. And then the stock zoomed.... am not making the same mistake with Hind Zinc though. Accumulating this in sufficient numbers. |
Posted By: shivkumar
Date Posted: 24/Apr/2008 at 12:19pm
Another set of good results from Hindustan Zinc despite falling prices internationally.
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Posted By: shivkumar
Date Posted: 24/Apr/2008 at 12:23pm
Hindustan Zinc capacity to rise 60pct by 2010MUMBAI, April 24 (Reuters) - India's largest zinc producer, Hindustan Zinc Ltd said on Thursday it would invest 36 billion rupees ($896 million) to boost its capacity by 60 percent and build a 160-megawatt power plant. The company, a unit of UK-based Vedanta Plc will raise its combined production capacity for lead and zinc to 1.07 million tonnes by 2010 from 670,000 tonnes, it said in a statement. Zinc capacity will rise by 298,000 tonnes to 883,000 tonnes by 2010 and lead production would go up by 100,000 tonnes to 185,000 tonnes, a company spokesman said. Last week, the company said it had mineral reserves of 232.3 million tonnes, which contain 27.5 million tonnes of zinc and lead as on March 31. Global zinc demand is expected to increase by 5.2 percent this year to 11.85 million tonnes, bolstered mainly by growth in Asia, International Lead and Zinc Study Group said on Wednesday. It also said demand in China is expected to grow by 10.4 percent spurred by further investment in infrastructure projects. Hindustan Zinc expects its silver production, which is a byproduct, to increase to 500 tonnes per year by 2010 from 100 tonnes to 120 tonnes now. ($1 = 40.2 Indian rupees) |
Posted By: dilip.r
Date Posted: 22/Apr/2011 at 2:41pm
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MUMBAI: Hindustan Zinc Limited (HZL), a lead – zinc company of Vedanta Resources Group is poised to become Asia's largest silver producer with production of 500,000 KGs of silver by 2013. Hindustan Zinc is today the largest primary silver producer in India with about 100,000 KGs of silver production. With on going expansion in mines, Hindustan Zinc would be producing about 500,000 kgs of silver by 2013 and with it become the largest silver producer in Asia and also will count amongst the World’s top 6 silver producing companies
During the current financial year 2008-09, till December 2008, Hindustan Zinc has already produced about 70,000 KGs of silver. There has been a constant growth in silver production by the Company. With production of about 51,300 Kgs of silver in 2006-07, the company increased its production to 80,405 Kgs in the year 2007-08. Silver is a co-product of Hindustan Zinc and comes out with Lead. Zinc- Lead mines are present only in the state of Rajasthan and are owned by Vedanta Resources Group company Hindustan Zinc. The 'Sindesar Khurd' mine of the Company is known for rich silver content and this mine is already under expansion. Once the ongoing expansion is completed, the silver production would increase substantially. Get on to twitter. Get trading tips & analysis on your desktop – FREE Going by the domestic market in India, the annual demand of silver is of about 3,200,000 kgs. The supply comes 77.1 % from imports, 18.8 % from secondary silver and 2.5% from Hindustan Zinc. Hindalco too shares about 1.7% of market. In the domestic market of about 3,200,000 Kgs, with almost 50% demand coming from industrial uses, 39% from jewellery and silver ware, 9% from coins and medals and about 1% each from photography and implied net investment. As the domestic supply of silver is so low, India is meeting most of the demand by either imports, through RBI - 77.1%, or through recycled silver - 18.8%. Hindustan Zinc has 2.5% share in the domestic market as of now and is the largest silver producer in the country. Global silver mine production rose by 4% in the year 2007, with strong gains from Chile, China and Mexico. The silver mine production reached 20,674,000 Kgs last year. Peru was the world's biggest silver mining country with 3,462,000 tonnes of silver, followed by Mexico, China, Chile and Australia. India at current is way behind with just 89,000 Kgs - 2007 of silver production and demand for 3,200,000 Kgs of silver. According to HZL, the increase in domestic supply would result in:- Reduction in import of silver – thus saving of foreign exchange, direct benefit to ancillary industries and exports may increase of the finished products,Hindustan Zinc positioning would also position India as the largest silver producer in Asia and a strong position globally and employment generation in the ancillary industry. HZL pointed out that a large supply of silver comes from the secondary market.and the secondary markets position is important in terms of meeting the demand as there is a huge gap in primary silver production and demand. Global mine production increased 23.6% and the demand 8.5%. But the large difference has always been met through recycled silver (secondary market). Interestingly secondary silver market supply has gone down. There has been significant gain - 23.6%, in the global silver mine production in the last about 10 years - 16,716,000 Kgs in 1998 to 20,675,000 Kgs in 2007. The demand has also increased from 25,413,000 Kgs in 1998 and 27,577,000 Kgs in 2007, about 8.5%. But there has always been a large gap and that has been met through old silver scrap and net government sales. The major demand comes from Industrial applications, that has increased from 9,752,000 Kgs in 1998 to 14,03,000 Kgs in 2007. The increase in demand has also been seen in Jewellery (16.2%) and coins & medals (36%). Ironically, the supply in old silver scrap has declined from 5,978,000 Kgs in 1998 to 5,599,000 Kgs in 2007, about 6.5%. The demand in photography and Silverware has decreased marginally. Demand for silver comes from Traditional, Industrial and new areas - about 95%, and is based on its unique properties that includes its strength, malleability and ductility, its electrical and thermal conductivity, its sensitivity to and high reflectance of light and also the ability to endure extreme temperature ranges. Silver properties make it a unique metal with no substitute. Silver is largely used in jewelry, coinage, photography, batteries, electronic equipments, medical applications, mirrors & coatings, solar energy, water purification, brazing & soldering and bearings to name a few. With Hindustan Zinc third phase expansion seeing increase in metal production by 310,000 tonnes - 210,000 of zinc and 100,000 tonnes of lead, the silver production is bound to rise. The company is moving ahead to become the World's largest integrated producer of zinc-lead by 2010 and will achieve its mission to produce one million of metal as well. All silver data source : World Silver Survey, 2008 http://www.commodityonline.com/news/HZL-to-become-Asias-largest-silver-producer-15455-3-1.html |
Posted By: dilip.r
Date Posted: 22/Apr/2011 at 2:51pm
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can HZL be a proxy to Silver play...
is it true... |
Posted By: gaurav12123
Date Posted: 22/Apr/2011 at 11:57am
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yss dilip it is.
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Posted By: basant
Date Posted: 23/Apr/2011 at 1:02pm
It is always better to buy a pure commodity producer or just the underlying commodity. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: vinvestor2010
Date Posted: 24/Apr/2011 at 9:42pm
Sirs the 2010 contribution of silver was 3.5 % of sales i.e. 103125 kg contributing 209.89 cr at Rs 20439 per kilo. This is till 2010 march.
Now price is triple (at least for March closing). So if sales this year was same quantity then 3.5x3 = 10.5 % would have been contribution.
However not sure about final results, but it might have contributed 7-15% of sales this year.
So would it be a marginal contributor or it could lead to actual spike in stock price?????
This is assuming price @Rs 60k per kilo and same level of sale. If sale is higher qty or avg price it could change.
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Posted By: dilip.r
Date Posted: 25/Apr/2011 at 12:22pm
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Expansion Projects The new 1.50 mtpa mill at Silver-rich SK Mine is ramping up well and is expected to achieve its rated capacity in FY 2012. With the accelerated capacity ramp up at SK mine, the Company is poised to exit FY 2012 with Silver production capacity of 500 tonnes (16 million oz). Commissioning of the 100 ktpa Lead smelter at Dariba is expected to be completed in Q1 FY2012, post which, the total Zinc-Lead metal production capacity will increase to 1,064 ktpa. Source: company website
http://www.hzlindia.com/common/images/Final-PR.pdf - http://www.hzlindia.com/common/images/Final-PR.pdf
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Posted By: dilip.r
Date Posted: 25/Apr/2011 at 12:31pm
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Please note current year 2010-11 relaisation is Apox Rs 30000/kg for 179000kg.
With production capacity going to 500,0000 kg and reliasation @ 65000/kg (rate now) - the excess price reliasation addes to bottem line.
People (jim roger/peter schieff) are speaking about silver going higher.
Current PE 13.22 times
I excpect PE expansion and earning growth is silver price goes up.
Basanji please add ur views.
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Posted By: dilip.r
Date Posted: 25/Apr/2011 at 12:35pm
i did vist a silver jewller last week to buy 1 kg silver bar
they will charge me 12% as making charges. which i felt is too high.
What is ur opnion on buying silver from commodity spot exchange in demat format.
I guess there are no Silver ETFs in India..
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Posted By: dilip.r
Date Posted: 25/Apr/2011 at 12:37pm
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Do we have any listed playes pure commodity (Sliver) produers...
i just found HZL....
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Posted By: kmp_saij
Date Posted: 01/Dec/2011 at 6:30pm
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I entered in Hindustan zinc at Rs.117. Now I am worried that SP Tulsian has recommended it to BUY. Balance sheet and all looks good in this company. but as it is recommended by tulsian I am little worried though it is only entry level exposure(less than 1% of portfolio  ). on sidenote, he also has recommended HDFC Bank. link: http://m.moneycontrol.com/newscenter_news.php?type=nc_market&storyid=627726&category=nc_market ------------- Own whatever’s feared, shun whatever’s beloved. |