Vedanta's Q1 Net Profit Beats Estimates Despite 40% Decline

In its financial report for the first quarter ended June, Vedanta revealed a consolidated net profit of Rs 2,640 crore. 

Although the profit figure marked a substantial 40 per cent decline compared to the same period last year when it stood at Rs 4,421 crore, it surpassed market estimates by a significant margin.

The decline in revenue from operations was also observed, falling 13 per cent to Rs 33,342 crore for the quarter, down from Rs 38,251 crore in the corresponding period last year. The drop in revenue was primarily attributed to a sharp reduction in output commodity prices. However, this decrease was partially offset by favorable movements in the exchange rate.

During the April-June period, the company reported an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of Rs 6,975 crore. This figure represented a 35 per cent decrease compared to the same period in the previous year when it was reported at Rs 10,741 crore. The decline in EBITDA was mainly influenced by lower output commodity prices and reduced sales.

The EBITDA margin for the quarter stood at 24 per cent, reflecting the company's ability to maintain a significant portion of revenue as earnings before accounting for other expenses.

The rise in financial costs was a notable aspect of Vedanta's financial performance during the June quarter. Financial costs experienced a sharp increase of nearly 74 per cent, reaching Rs 2,110 crore. This was primarily attributed to the rise in blended cost of borrowings and average borrowings.

Despite the challenges faced during the quarter, Vedanta witnessed some positive developments in key businesses. Aluminum production saw a 2 per cent year-on-year increase, reaching 579 kt. Moreover, the cost of production for aluminum decreased by an impressive 27 per cent compared to the previous year.

For the Zinc India business, Vedanta reported its highest-ever mined metal production in the first quarter at 257 kt, representing a 2 per cent year-on-year growth. While refined metal production remained stable at 260 kt, saleable silver production witnessed a marginal 1 per cent increase, totaling 179 tonnes.

The company's financial position during the quarter indicated that the gross debt had risen to Rs 73,484 crore as of June, compared to Rs 66,182 crore in the preceding March quarter. Meanwhile, Vedanta's net debt was recorded at Rs 59,192 crore.

On Friday, the company's scrip closed 1.44 per cent lower at Rs 278.15 on the National Stock Exchange (NSE).