Vedanta profit rises fivefold to Rs 4,615 crore on low-base effect

Low base effect drives better YoY show, bottom line up 9.2% sequentially

Anil Agarwal-led Vedanta re­ported consolidated net profit of Rs 4,615 crore in the July-September quarter, up more than five times from the corresponding period last year at Rs 838 crore on a low-base effect. Sequentially, net profit was up 9.2 per cent from Rs 4,224 crore.

The company’s top line, in the period under review, stood at Rs 30,048 crore, up 44 per cent from the same period last year on the back of high commodity prices. The qua­rterly revenue was a record for the company.

“High commodity prices have placed Vedanta in a strong position and we are benefitting from this increase in prices,” Sunil Duggal, chief executive officer (CEO) said during a conference call to discuss the earnings. Within business segments, aluminium revenues were the highest at Rs 12,119 crore in the quarter despite coal shortage, mainly in the month of September. This was followed by zinc-lead revenues of Rs 5,897 crore in the period under review.

According to Bloomberg estimates, the company’s net sales in the July-September quarter were expected to be at Rs 28,396 crore, while the bottom line was seen at Rs 4,503 crore.

Alongside, the company also reported record quarterly earnings before interest, taxes, depreciation and ammortisation (Ebitda) of Rs 10,582 crore in the September quarter, up 62 per cent YoY on improved commodity prices and higher volumes at aluminium.

Ebitda margin, in the period under review, was at 40 per cent as against 41 per cent in the preceding quarter and 36 per cent in the corresponding period last year. With regard to debt levels, the company’s gross debt was at Rs 51,040 crore on September 30, 2021, decr­easing by Rs 11,719 crore on a YoY basis. This was mainly due to deleveraging at the zinc and aluminium business. Net debt was at Rs 20,389 crore in the period under review, down by Rs 7,232 crore on a YoY basis, primarily driven by strong cash flow from operations, post capex and dividend payout.

“We witnessed steady volume performance across business segments, and sustained margins benefitting from high commodity prices despite a challenging cost environment. We continue to focus on prudent capital allocation and deleveraging. We reduced net debt by Rs 7,232 crore year-on-year,” said Duggal. “We have strong cash and cash equivalents of Rs 30,650 crore. The company follows a board-approved investment policy and invests in high-quality debt instruments with mutual funds, bonds, and fixed depo­sits with banks,” added Duggal.

With regard to coal shortage, Duggal said the situation is improving with average coal stockpiles days moving to 5 da­ys from one day during Sept­ember. “Within the next 3-4 we­eks, the coal supply situat­ion should ease,” he said. 

Vedanta is actively looking to have strong coal linkages via its three licensed blocks. Of these, it hopes to make one of the coal mines operational within a year and the balance two over the next couple of years.