Analysts' Picks: Hindustan Zinc

Hindustan Zinc
CMP: Rs 827.50
Target price: Rs 996

Macquarie has maintained its ���outperform��� rating on Hindustan Zinc while raising its 12-month price target to Rs 996 from Rs 781 earlier, citing upgrades in zinc price forecasts. ���Even though we do not expect the zinc market to get seriously tight over this period, we believe that prices will increase as high-cost marginal supply becomes needed,��� the brokerage said in a report. Macquarie has upgraded its zinc price forecasts by 21% in 2009-10, 21% in 2010-11 and 9% in 2011-12. The brokerage expects Hindustan Zinc���s ongoing expansion plans to drive growth. ���The expansion to increase capacity by 50% remains on track for completion in 2010. Zinc and lead capacity will increase from 754kt to 1064kt, along with associated mine capacity and captive power plants,��� Macquarie said.

The brokerage, however, believes betting on the stock through its parent Sterlite Industries. ���We recommend participating through the parent, Sterlite Industries, which we believe offers more leverage and has additional catalysts in the form of its upcoming lucrative power business,��� it added.