Vedanta Q1 Results: Profit Falls But Meets Estimates
Net profit of the billionaire Anil Agarwal-controlled miner fell 34% sequentially to Rs 4,224 crore.
Vedanta Ltd.’s profit declined but met estimates in the quarter ended June, a period when local lockdowns to curb the severe second wave of Covid-19 stalled a nascent recovery in economic activities.
Net profit of the billionaire Anil Agarwal-controlled miner fell 34% sequentially to Rs 4,224 crore, according to its exchange filing. That compares with the Rs 4,186-crore consensus estimate of analysts tracked by Bloomberg.
An 11% quarter-on-quarter drop in finance costs and improved operational performance cushioned the bottom line.
Net sales remained flat at Rs 28,412 crore, against the Rs 26,821-crore forecast.
Vedanta’s earnings before interest, tax, deprecation and amortisation rose 9.3% sequentially to Rs 9,871 crore, compared with the estimated Rs 9,496 crore. That came as commodity prices rose, but was partially offset by lower sales volume of zinc, iron ore & steel and copper and higher cost of production due to input inflation.
Other Highlights
Net debt was at Rs 20,261 crore as on June 30, 2021, down by Rs 6,989 crore over the year earlier.
Debt fell by Rs 4,153 crore over the preceding quarter, primarily driven by cash flow from operations post capex and intercompany loan repayment from Vedanta Resources.
Segment-Wise Ebitda (QoQ)
Zinc India registered 8.8% decline at Rs 3,508 crore.
Zinc International saw a 99% rise at Rs 401 crore.
Oil & gas witnessed 0.5% decline at Rs 1,064 crore.
Aluminium clocked a 36% rise at Rs 3,725 crore.
Power division’s operating profit more than doubled at Rs 346 crore.
Iron ore witnessed 3.9% decline at Rs 762 crore.
Steel division witnessed a decline of 27.5% at Rs 224 crore.
Copper India registered Rs 106-crore operating loss versus Rs 71-crore operating loss in Q4.
Shares of Vedanta closed 1.59% higher before the results were announced compared with a 0.2% drop in the benchmark Nifty 50.
Takeaways From Vedanta Concall
Further cost reduction possible for aluminium division by operating captive coal mines and increasing Lanjigarh refinery's capacity.
Balco expansion of 414 capacity KTPA at Rs 6,600 crore. Internal rate of return estimated at 20-25%, with payback period of 4-4.5 years.
Doubling capacity at ESL Steel Ltd. to 3 MTPA at capex of $230 million.
Zinc International: Gamsberg on course to achieve guidance of 190-210 KTPA for the year with crusher throughput, mill throughput and MIC production being scaled up.
Expect $350 million capex in oil and gas for FY22. Exit rate in June 2021 at 170 koepd.
Expect total capex for FY22 between $1.8 billion-$2 billion.
Vedanta Resources Ltd.'s net debt is $12.5 billion.
Payment of dividend from Vedanta may help in deleveraging of parent.
Will target net debt/Ebitda threshold of 1x at Vedanta and 2-2.5x at VRL.
Have tax shield until October 2021 end to pass on the dividend received from Hindustan Zinc Ltd. during preceding fiscal.