Increase in net profit was mainly driven by higher zinc volumes & prices, gain from strategic hedging, and favourable exchange rates while being partially offset by the rising input commodity prices and lower lead and silver prices. Sequentially net profit for the quarter was 13.3% lower on account of lower metal production and lower zinc & silver prices being partially offset by strategic hedging gains and favourable exchange rates.

The increase in revenue was led by higher refined metal & silver volumes, gain from strategic hedging, zinc prices and favourable exchange rates partly offset by lower lead and silver prices.

Sequentially revenue witnessed a decline of 11.2%, primarily due to lower zinc prices & volume and lower lead & silver prices while being offset by gain from strategic hedging, favourable exchange rate and improved lead & silver volumes. Sequentially lead and silver sales volumes increased by 6% & 9.1% respectively.

Zinc cost of production before royalty (COP) was $1,259 (Rs 1,00,307) per million tonnes (MT) for the quarter, (on YoY basis, higher by 12% in USD terms and up 20.5% in Rs terms and sequentially, it was down 0.4% in USD terms and up 3% in Rs terms). The COP was affected largely on account of higher coal prices, lower domestic coal (linkage) availability, input commodity inflation being partially offset by higher volumes & improved operational efficiencies.

EBITDA for the quarter was Rs 4,387 crore, up 31.7% YoY and down 16.9% sequentially, primarily due to higher revenues being partially offset by increased costs owning to the input commodity inflationary environment.

On the operational front, mined metal production for the quarter was at 255 kt, up 2.8% YoY on account of better grades and improved mill recoveries. Sequentially, mined metal production grew by 1.4% largely on account of better grades.

Integrated metal production for the quarter was 246 kt, up 17.5% YoY, in line with improved smelter performance, better mined metal availability and base impact due to extended maintenance shutdown during the same period last year. On a sequential basis, integrated metal production witnessed a decrease of 5.5% due to lower roaster availability on account of the breakdown of an acid storage tank at the Chanderiya plant during Q2 FY23 and the time taken in ramp up of production post maintenance.

Integrated zinc production for the quarter was 189 kt, up 16.4% as compared to Q2 FY22 and was 8.3% lower sequentially. Integrated lead production for the quarter was up 21.5% YoY and 5.3% sequentially to 57 kt on account of the Pyro plant being operated in the Lead-mode for a part of the quarter and better plant availability.

Integrated silver production for the quarter was up 27.6% YoY and 9.5% sequentially at 194 MT in line with lead metal production and WIP liquidation.

As on 30 September 2022, the company's gross investments and cash & cash equivalents were Rs 17,807 crore as compared to Rs 24,254 crore at the end of June 2022. The company's net investments as at end of 30 September 2022, was Rs 15,696 crore as compared to Rs 21,439 crore at end of June 2022.

Commenting on the future outlook, Hindustan Zinc said, “We would like to reiterate our guidance on volume and capex for FY23. Mined metal is expected to be between 1,050-1,075 kt & Refined metal production in the range of 1,000-1,025 kt. FY23 saleable silver production is projected to be between 700-725 MT. The project capex for the year is expected to be in the range of $ 125-150 million. In the previous quarter, management had cautioned against risk to cost guidance from rising input commodity prices. In light of the same, we would like to revise our cost guidance upwards. Zinc cost of production in FY23 is expected to be in between $1,225-1,275 per MT.”

Commenting on the performance, Arun Misra, CEO, said, “Our world-class mining assets backed with our zeal for operational excellence has enabled us to deliver consistent results in the toughest of circumstances. We have further accelerated our digitalisation efforts to aid in our business efficiency & safety. With last twelve months run-rate for both mined & refined metal comfortably sustaining above one million tonnes, we are fully geared to deliver another stellar performance this year. In-line with our commitment to net zero by 2050, I am happy to share that we have signed a Power Delivery Agreement for sourcing up to 200 MW renewable energy, which will avoid 1.2 million MT of carbon emission.”

Sandeep Modi, deputy & interim CFO, said, “We continue to maintain our cost leadership in the global zinc cost curve despite spiralling energy prices and mounting inflationary pressures. With our proactive investments in automation & digitalisation along with razor sharp focus on cost optimisation initiatives & improvement in overall efficiencies, we are confident to deliver superior returns to our shareholders.”

Hindustan Zinc, a Vedanta Group company, is an integrated producer of zinc, lead and silver. As of 30 September 2022, Vedanta holds 64.92% stake in the company.

Shares of Hindustan Zinc were up 0.88% to close at Rs 281 on Friday, 21 October 2022.