Vedanta Reports Highest Quarterly Profit In 12 Quarters
Vedanta’s profit jumps 4.5 times in the October to December quarter.
Vedanta Ltd., the flagship unit of Anil Agarwal’s Vedanta Resources Plc, reported 4.5 times jump in its net profit, and yet fell short of analysts’ estimates.
Net profit for the October to December quarter soared to Rs 1,866 crore, the highest in 12 quarters, according to the company’s filing to the stock exchanges. The consensus estimate of 13 analysts tracked by Bloomberg stood at Rs 1,990 crore.
Though there was a planned shutdown in its oil and gas unit, which resulted in lower volumes, net sales rose 30 percent to Rs 20,296 crore from Rs 15,656 crore in the year-ago period. The better-than-expected performance was mainly on account of the ramp-up in the iron ore, aluminium and power businesses, and higher metal and oil prices.
This was Vedanta’s first year-on-year revenue growth in the last 10 quarters.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) surged 82 percent to Rs 5,880 crore from Rs 3,235 crore for the same period last year. EBITDA margin expanded 820 basis points to 28.8 percent led by better metal prices, improved cost efficiencies, and higher volumes in the power segment.
Finance costs rose 8 percent to Rs 1,508 crore from Rs 1,398 crore due to capitalisation and increase in borrowings by the aluminium and power businesses.
Gross debt stood at Rs 64,966 crore for the nine months ended December 2016, 82 percent of which was rupee-denominated.
Other income stood at Rs 1,033 crore, a fall of 17.5 percent compared to the July to September quarter, primarily on account of lower mark-to-market gains on investments in the current quarter.
Segment-Wise Performance
- Iron ore segment was the best performer, with revenue soaring 2.5 times to Rs 1,449 crore. EBIT margins stood at 30 percent.
- Copper segment revenue declined 27 percent to Rs 5,440 crore due to a fall in the metal’s prices.
- Zinc business revenue from India jumped 1.5 times to Rs 4,845 crore, while the revenue from the international business rose 37 percent to Rs 588 crore.
- Aluminium business revenue grew 27 percent to Rs 3,858 crore, with an EBIT margin of 10 percent.
- Power business revenue rose 26 percent while the margins expanded by 667 basis points to 20.13 percent.
The management expects the Cairn India merger to complete by March 2017. Vedanta had announced the merger with the group company in June 2015.
Vedanta shares have risen almost four times in the last month, making it the best performing stock on the Nifty Metal Index. Eighty-six percent of analysts tracked by Bloomberg have a ‘buy’ rating on the stock.