Vedanta Q2 Results Review - Cost Efficiency Improves Margins Across Segments: Systematix

Systematix Research Report

Vedanta Ltd.’s Q2 FY24 consolidated Ebitda at Rs 114.8 billion (+49.1% YoY, +78.8% QoQ) was 75% above our estimate largely due to recognition of Rs 47.6 billion in revenue from operations in the oil and gas business relating to arbitration award granted by the government of India.

Vedanta reported net loss after taxes of Rs 21.4 billion due to the impact of exceptional tax expense of Rs 61.3 billion relating to the new tax regime adoption. It posted strong performance across segments helped by higher volumes and lower cost of production partially offset by lower commodity prices. Aluminium/oil and gas/ Iron ore and steel segment Ebitda rose 158.5%/190.4%/117.9% YoY led by higher volumes and low cost of production.

Among the key businesses, aluminium production grew 1.7%/2.6% YoY/QoQ to 594 kilo tonne, while the cost of production fell 25.3%/6.1% YoY/QoQ.

Zinc International segment reported Ebitda of Rs 2.8 billion (-51%/+2.5% YoY/QoQ) due to lower throughput and prices. Net debt decreased by Rs 14 billion during the quarter due to stronger cash flow generation, resulting in an improvement in the net debt/Ebitda ratio to 1.64 times from 1.88 times as of June 2023.

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