A worker stacks copper plates during the treatment process. (Photographer: Waldo Swiegers/Bloomberg)

Vedanta Reports Highest Ever Quarterly Profit

Vedanta Ltd., the flagship of Anil Agarwal’s Vedanta Resources Plc., reported its highest-ever quarterly net profit in the three months ended March, helped by rising commodity prices and a special dividend by its subsidiary Hindustan Zinc Ltd.

Net profit for the fourth quarter stood at Rs 2,989 crore against a loss in the same period last year. The consensus estimate of 10 analysts tracked by Bloomberg stood at Rs 2,803 crore.

Net revenue rose 40.5 percent, mainly on account of improved iron-ore and aluminium capacity and higher metal and oil prices. Better cost management also helped, said the company’s outgoing Chief Executive Officer Tom Albanese.

Revenue from zinc doubled as prices rose globally, pushing up margins. The rising prices also helped Hindustan Zinc pay a special divided of close to Rs 7,500 crore to Vedanta in the fourth quarter, taking the total payout to Rs 14,648 crore in financial year 2016-17.

Vedanta Reports Highest Ever Quarterly Profit

EBITDA margin expanded by more than 1,000 basis points to 31 percent, led by higher metal prices, improved cost efficiency and a ramp-up in volumes in the power business in Odisha (a basis point is one hundredth of a percentage point). Other income in the fourth quarter stood at Rs 921 crore, down by 30 percent compared to last year, mainly due to lower mark-to-market gains on investments and a lower rate of return on investments.

Finance costs fell marginally to Rs 1,504 crore from Rs 1,562, while the company’s net debt reduced by Rs 3,415 crore to Rs 8,099 crore for the year ended March 2017. The company expects to reduce the gross debt by Rs 6,000 crore in the April-June quarter Kumar told BloombergQuint.

Segment Break-Up

  • Zinc was the best performing segment, with a two-fold jump in revenue to Rs 6,108 crore year-on-year. Margins on earnings before interest and tax (EBIT) stood at 48 percent.
  • The copper segment, which contributes the most to the revenue, saw its turnover increase by 18 percent to Rs 6,804 crore.
  • Revenue from aluminium business rose 48 percent to Rs 4,652 crore with a positive EBIT margin of 15 percent, led by higher prices.
  • Power segment’s revenue rose 16.2 percent while margins expanded by 320 basis points to 21.2 percent.

Vedanta’s shares have risen 144 percent in the last 12 months, making it one of the most preferred stock in the Nifty Metal Index. Eighty-six percent of the analysts tracked by Bloomberg have a ‘buy’ rating on the stock with an expected return potential of 26 percent in the next 12 months.