This metal stock is HDFC Securities’ top pick for 2022

Hindustan Zinc (HZL) is one of the world’s largest and India’s only integrated manufacturers of zinc-lead and silver. The company is India’s largest primary zinc producer with a market share of around 77% including alloys and 80% market share excluding alloys.

Domestic broker and research firm HDFC Securities has recommended this metal stock as one of its top stock picks for 2022. Hindustan Zinc, the leading zinc-lead mining company, is up roughly 31% this year (to date).

“The high operating efficiency is achieved through fully integrated operations (with an in-house power plant capacity of 485.5 megawatts) and low-cost, high-grade zinc reserves, as well as access to the majority of the lead-zinc deposits in Rajasthan through long-term agreements with the Indian government the company will remain a low-cost zinc producer in the medium term, “says the press release.

Hindustan Zinc is a subsidiary of Vedanta Ltd, which owns a 64.9 percent stake in the company while the center retains a 29.5 percent stake.

The approval of the Supreme Court to divest the remaining 29.5% stake in the center in the open market in November is expected to result in a better valuation after the divestment, according to the brokerage house.

The demand for zinc is very closely related to the galvanized steel industry. The steel industry depends on the growth of end-user industries such as automobiles, consumer goods, batteries, home appliances, construction and infrastructure.

Any downturn in any of these industries will affect the demand for galvanized steel, which could become a major problem. The company also faces regulatory and environmental risks as all mines in Rajasthan are bundled, HDFC Securities said.

The views and recommendations made above are those of an individual analyst or brokerage firm and not of Mint.

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