Vedanta Q2 net profit at Rs 4,352 crore; demerger completion by March-end

Company met Street expectations, expects to complete demerger process by March-end

Anil Agarwal-promoted Vedanta Ltd on Friday reported a consolidated net profit of Rs 4,352 crore (attributable to the owners of the company) for the September quarter (Q2) against a loss of Rs 1,783 crore in the year-ago period, helped by a one-time gain and improved performance.

 

The loss in the same quarter last year was owing to a one-time hit over a change in tax regimes. Revenue for Q2 was down 3.6 per cent on a year on year (Y-o-Y) basis to Rs 37,171 crore.

 

Sharing a timeline on the proposed demerged and separate listing of each of its businesses into six entities, the company executives expect completion before March-end.

 

 

In announcements made on Friday, Vedanta also made some upward revisions to its earlier stated capital expenditure for Balco. Arun Misra, executive director for the company, noted the upward revision is of a ‘cost to finish’ nature, combined with additional debottlenecking initiatives. 

 

In a Bloomberg poll, eight analysts estimated revenue of Rs 34,942 crore and four analysts estimated a net income adjusted of Rs 2,827 crore. The company met Street expectations.

 

The company said PAT before exceptional items was at Rs 4,467 crore, up 230 per cent from a year ago. It said the quarter under review had an exceptional gain of Rs 1,136 crore, majorly due to impairment reversal in the oil and gas business, partly offset by impairment charge in ASI, and cess in zinc and iron ore, following a Supreme Court judgement to levy additional cess on mineral-bearing land and mining rights.

 

Sequentially, Vedanta’s revenue rose 5.5 per cent.

 

Gross debt at the end of September was at Rs 78,654 crore. The company’s management noted that recent fundraising rounds - through a stake sale in Hindustan Zinc and a qualified institutional placement - were used for deleveraging purposes.

 

The revisions in Balco’s expansion include increasing the smelter capacity to 435 KTPA from 414 KTPA, an additional wire rod capacity of 50 KTPA, and doubling the sow ingot capacity to 200 KTPA. With these new additions, the project cost has risen to Rs 11,816 crore from the earlier approved Rs 9,247 crore.

 

Balco expansion revisions include a smelter capacity increase to 435 KTPA from 414 KTPA, an additional wire rod capacity of 50 KTPA, and sow ingot capacity addition doubled to 200 KTPA, the company said. With these additions, the project cost has risen to Rs 11,816 crore from the earlier approved Rs 9,247 crore. The company stated that this would be funded through accruals and debt. Vedanta also approvedRs 5,209 crore in capital expenditure for the Athena Chhattisgarh power plant project in Sakti district, Chhattisgarh.

 

At the Vedanta Ltd level, the company looks to spend around $1.1 billion on capital expenditure for the remainder of the financial year.

 

In his outlook, Misra said the company expects improved performance in the second half of the financial year. He added that the company aims to achieve $6.5 billion in Ebitda by the end of the current financial year. Ebitda is earnings before interest, taxation, depreciation, and amortisation.

 

Misra also noted that the company’s performance was boosted by structural cost-cutting measures, with expectations for a further decline in the cost curve for aluminium and zinc.