Brokers’ Call: Hindustan Zinc, RIL

Barclays Overweight on HZL

Barclays has maintained its ‘Overweight’ rating on Hindustan Zinc for its extremely competitive cost structure and strong balance sheet. The smooth transition of the Rampura Agucha mine to underground operations and the ramp-up in silver contribution from SK mine are important factors. Barclays has set a 12-month price target of Rs 142 for HZL. “Hindustan Zinc’s smelting assets are in the lowest quartile on the global cost curve, and we believe the cost competitiveness is sustainable given that the company’s mining assets have a life of more than 30 years,” analysts at Barclays said.



RIL to Outperform: CLSA

CLSA has assigned an ‘Outperform’ rating on Reliance Industries, citing lower tax rate and higher gross refining margins. Larger-than-expected forex loss was more than offset by lower than modelled effective tax rate due to deferred tax reversal as tax depreciation has now become lower than book depreciation after limited new capitalisation in the past few quarters. For the first time in nine quarters, capex rose above half of cash profits, as RIL’s investments in downstream projects gathered pace. “While we would like to see a larger project inventory and note that another $25 billion capex could easily be handled, these projects along with higher volumes and gas price in E&P could double RIL’s profit over five years,” the report said.