Hindustan Zinc had hit a new 52-week high after the Cabinet Committee on Economic Affairs (CCEA) approved the sale of residual stake of 29.5% held by the Govt of India. It is the expected open offer price which will now keep the share price buoyant. A couple of months ago, Vedanta had renewed its offer at US $ 3 billion for Govt’s residual stake. At current exchange rate of Rs. 61 to a US $, the offer price could be around Rs.145-150/share, leaving enough headroom from its offer, as well as current market price.

Financially, the company has done well. Its net profit for Q3Fy14 came in at Rs.1723 crore, up 7% (YoY) on a 9% rise in revenue at Rs.3410 crore. The increase in revenue was driven by higher zinc sales volume and rupee depreciation, partially offset by lower silver and acid prices. Zinc was actually the savior as all the other metals reported a falling revenue and profit. EBITDA was up 21% at Rs.1828 crore due to higher integrated sales volume and rupee depreciation, partially offset by lower silver prices and higher costs in terms of rupee. Given these earnings, profits should have actually been higher but lower other income and higher tax outgo pulled down the profits.

During the quarter, its integrated saleable zinc metal production was up 17% and that of lead and silver was up 21% and 35% respectively.Its Kayad mine production went on stream during Q3 and its project capex remains in line with its guidance of $250 million/year. As at 31^st Dec’14, this debt free company had cash and cash equivalents to the tune of Rs.24,095 crore of which Rs.19,111 crore is invested in debt mutual funds, Rs.1972 crore in bonds and Rs.3000 crore in FDs with banks.