UDAIPUR (Commodity Online): Hindustan Zinc Ltd has deicded to lower its zinc price by Rs 1,500 per tonne to Rs105,600/tonne with immediate effect.

According to a press note, the company has also cut its lead price by Rs 1,000/tonne to Rs105,600/tonne.

The company didn’t give any reason for the cut in prices. Hindustan Zinc is a unit of London-listed Vedanta Resources PLC.

Meanwhile, Goldman Sachs maintains ‘Neutral’ rating on Hindustan Zinc. Hindustan Zinc is one of the top five (in terms of production) and among the lowest cost producers of zinc in the world.

Goldman Sachs believes its competitive edge will be further strengthened when it hikes its existing capacity by 40%, in phases, from June 2010.

High quality zinc reserves, long mine life, economies of scale and a strong balance sheet are added advantages. Goldman Sachs believes that the current high inventory level would act as a dampener for any potential significant price recovery in zinc over the medium term.

It revises the FY10E-FY 12E EPS by 13%/6%/8% respectively; on account of higher LME zinc/lead price assumptions.

Further, Goldman Sachs revises their 12-month P/B-based price target to Rs 770. This increase is driven by: (1) rolling forward valuations to FY11E basis; and (2) increasing the target P/B multiple to 1.7X (from 1X earlier) based on sector relative valuation framework.

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