2025-06-11-花旗集团-印度斯坦锌业（HZNC）_印度斯坦锌业（HZNC.BO）_董事会批准首次中期股息为每股10卢比_11页_311kb

Hindustan Zinc (HZNC.BO) Citi Research Summary

Key Announcement

• Board approves first interim dividend of Rs10 per share, implying a cash outflow of approximately Rs42.3bn (US$500m), with a payout ratio of 39% based on forecasted FY25E estimates.
• Citi maintains a "Sell" recommendation due to high valuations and a negative outlook on zinc prices, despite incorporating Rs15 per share for FY26E dividends.

Commodity Outlook

• Zinc expected to see a surplus in CY25E, but Citi's outlook suggests weaknesses from US tariffs, potentially reducing EBITDA impacts.
• Silver shows resilience, with price changes affecting EBITDA by ~3.6% for a 10% price swing, and is likely subdued in 2025E but may outperform in 2026E.
• Balance forecasts indicate a 190-220moz deficit over 2025-26E, driven by industrial demand.

Valuation Assessment

• Hindustan Zinc trades at ~11.8x EV/EBITDA for Sep26E, above 3-year/5-year consensus averages of ~9x/8x.
• Target price set at Rs400, implying a ~25% downside from the current price.
• Maintain "Sell" stance due to valuation risks and zinc outlook.

Risk Factors

• Potential upside catalysts: higher-than-expected metal prices, rupee depreciation, and increased volumes.
• Downside risks: high valuations, zinc price cyclical dips, and sensitive EBITDA to silver price changes.

Financial Highlight

• As of Mar25, net debt was Rs11.7bn, down from Rs41.2bn in Dec24; FY25 capex was ~Rs43.2bn, with growth capex targeted at US$225-250m for FY26E.
• Silver and zinc price sensitivity detailed: US$/oz or US$/t changes impact EBITDA and fair value significantly.