Vedanta Q2 preview: Here's what to expect from mining major in Sept quarter

Vedanta Q2 Preview: Mining major Vedanta will announce its financial results for the second quarter of the fiscal year 2025 (Q2FY25) today, November 08, 2024.

 

The September quarter results of Anil Agarwal-backed Vedanta are anticipated to be impacted by a mix of macroeconomic factors and segment-specific performance, according to domestic brokerages. 

 

Analysts at Phillip Capital foresee a decline in margins driven by falling commodity prices, particularly in aluminium, zinc, and lead, alongside a drop in crude prices. Despite this, they expect improved volumes in certain segments like Zinc International, Steel, and Copper. Kotak Institutional Equities shares a similar outlook, forecasting a Q-o-Q drop in Ebitda due to lower commodity prices but a positive YoY growth, especially in aluminium and zinc.

 

Overall, while revenue projections vary, all three brokerages predict growth in Ebitda Y-o-Y, though the pace of growth differs, influenced by commodity price fluctuations and operational efficiencies across Vedanta’s diverse business segments.

 

On the bourses, Vedanta shares have risen approximately 13 per cent over the past six months. However, they have seen a decline of about 8 per cent in the last month. Year-to-date, the stock has surged more than 18 per cent.

 

Meanwhile, Vedanta shares, on Thursday, November 07, settled 3.43 per cent lower at Rs 457.80 per share. In comparison, BSE Sensex settled 1.04 per cent lower at 79,541.79 levels.

 

Given this, here’s what brokerages expect from Vedanta Q2FY25 results:

 

Phillip Capital 

  Analysts at Phillip Capital expect Vedanta to see increased volumes in the Zinc International, Steel, and Copper segments on a quarter-on-quarter (Q-o-Q) basis, while Aluminum, Iron Ore, and Facor volumes are likely to decline. With prices for Aluminium, Zinc, and Lead on the London Metal Exchange (LME) falling by 5 per cent, 1 per cent, and 6 per cent respectively, and crude prices down 8 per cent Q-o-Q, margins are expected to decline due to lower realisations. 

 

Hence, Phillip Capital analysts project an adjusted profit after tax (PAT) (after minority) of Rs 1,743.8 crore (down 276.5 per cent year-on-year, or Y-o-Y), with revenue at Rs 35,466.1 crore (down 8.9 per cent Y-o-Y). Ebitda, meanwhile, is expected at Rs 8,874.4 crore, up 25.4 per cent Y-o-Y.

 

Kotak Institutional Equities 

Those at Kotak Institutional Equities forecast a Q-o-Q decrease of 8.6 per cent in Ebitda (up 35 per cent YoY) due to declining commodity prices, particularly in zinc and aluminium. Aluminum Ebitda is expected to decline 17 per cent Q-o-Q (up 88 per cent Y-o-Y), largely due to lower LME prices, while the Oil & Gas division’s Ebitda may fall 6.7 per cent Q-o-Q on lower volumes. The Zinc India division is likely to see a slight 0.8 per cent Q-o-Q increase in Ebitda, supported by higher silver volumes. 

 

Thus, Kotak projects net profit at Rs 2,494.5 crore, total revenue at Rs 35,968.6 crore (up 5.2 per cent Y-o-Y), and Ebitda at Rs 9,086.1 crore, reflecting a 35.2 per cent Y-o-Y rise.

 

Nuvama  

Nuvama analysts expect Vedanta’s Ebitda to decline 5 per cent Q-o-Q due to lower base metal prices, especially for aluminium and lead, which are down approximately 6 per cent Q-o-Q. Higher alumina costs are anticipated to increase the cost of production for aluminium by 3 per cent Q-o-Q, while zinc costs remain stable. Additionally, Zinc International is expected to grow about 15 per cent Q-o-Q due to higher volumes. 

 

Consequently, Nuvama projects revenue at Rs 33,120.3 crore (down 3 per cent Y-o-Y), Ebitda at Rs 9,401.8 crore (up 40 per cent Y-o-Y), and core PAT at Rs 2,456.1 crore (up 238 per cent Y-o-Y).