Hindustan Zinc (HZL) is one of the world’s largest and India’s only integrated manufacturers of zinc-lead and silver. The company is India’s largest primary zinc producer, with approximately 77% market share including alloys and 80% market share without alloys.
Domestic brokerage and research firm HDFC Securities recommends this metal stock as one of its top stock picks for 2022. Shares of zinc-lead miner, Hindustan Zinc, are up about 31% this year (year-to-date).
“High operational efficiency driven by fully integrated operations (with captive power plant capacity of 485.5 MW) and access to the bulk of lead-zinc deposits in Rajasthan through low cost, high grade zinc reserves and long-term agreements Government of India, therefore, the company should continue as a low cost zinc producer in the medium term,” the note said.
Hindustan Zinc is a subsidiary of Vedanta Limited, which holds 64.9 per cent stake in the company, while the Center holds 29.5 per cent.
According to the brokerage house, the Centre’s disinvestment of the remaining 29.5% stake in the open market in November is expected to give a better valuation with the Supreme Court’s nod.
The demand for zinc is closely tied to the galvanized steel industry. The steel industry depends on the development of end user industries such as automotive, consumer durables, batteries, home appliances, construction and infrastructure.
The slowdown in any of these industries will impact the demand for galvanized steel which could be a major concern. The company also faces regulatory and environmental risks as all the mines are clustered in Rajasthan, HDFC Securities highlighted.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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