Vedanta Q2 Results: Net Profit Down 61 Per cent To Rs 1,808 Crore On Higher Expenses

Vedanta logs Rs 36,237 crore revenue, up 21 per cent year-on-year, Rs 8,038 crore EBITDA, and strong free cash flow (pre capex) Rs 8,369 crore

Vedanta’s consolidated income during the July-September period increased from Rs 31,074 crore last year to Rs 37,351 crore this year.

Source : Vedanta Resources

Vedanta Ltd reported a 60.8 per cent decline in its consolidated net profit for the quarter due to higher expenses. The company’s profit stood at Rs 1,808 crore for the quarter that ended September 30. Vedanta Ltd in its regulatory filing said that the company had posted a consolidated net profit of Rs 4,615 crore in the year-ago period.

Vedanta reports Rs 36,237 crore revenue, up 21 per cent year-on-year (YoY), Rs 8,038 crore EBITDA, and strong free cash flow (pre capex) Rs 8,369 crore.

The company's 2QFY23 revenue increased by 21 per cent YoY to Rs 36,237 crore on account of higher sales volume, strategic hedging gains and foreign exchange gains; partially offset by lower commodity prices. While 2QFY23 revenue decreased by 5 per cent QoQ to Rs 36,237 crore on account of slip in output commodity prices; partially offset by higher sales volume across businesses, strategic hedging gains and favourable foreign exchange movement, according to the release.

The 2QFY23 EBITDA decreased by 24 per cent YoY to Rs 8,038 crore on account of input commodity inflation and lower output commodity prices; partially offset by improved operational performance, hedging gains and foreign exchange gains. The 2QFY23 EBITDA decreased by 25 per cent QoQ to Rs 8,038 crore on account of lower output commodity prices; partially offset by improved operational performance, hedging gains, softening of input commodity prices and foreign exchange gains. Vedanta's EBITDA margin1 stood at 25 per cent.

Vedanta’s consolidated income during the July-September period increased from Rs 31,074 crore last year to Rs 37,351 crore this year. The company's expenses during the quarter under review increased to Rs 33,221 crore from Rs 23,171 crore in the year-ago period.

Sunil Duggal, chief executive officer (CEO), Vedanta, said “I am pleased to share that we have generated strong free cash flow (pre capex) of Rs 8,369 crore underpinned by robust operational and financial performance. I am also happy to inform that Vedanta has entered in the club of top 10 DJSI ranked global metals and mining companies; ranking 6th globally. Our growth and vertical integration projects, aimed to reduce market volatility impact and create shareholders’ value, are progressing well. We remain well positioned, with a rich diversified asset portfolio, strong balance sheet, and cost optimization levers, to withstand challenging macroeconomic environment.” 

Vedanta said that its projects on growth and vertical integration, which intend to reduce market volatility impact and create shareholders' value, are going well. The company said that its board has given a go-head for expansion of rolled product capacity at its arm Balco from current 50 KTPA to 180 KTPA at a revised cost of Rs 595 crore.

"With the completion of this project, Balco will be placed in high premium product segment," Vedanta said. The board has also approved expansion of smelter capacity of Balco from existing 580 KTPA to 994 KTPA at a revised cost of approximately Rs 8,094 crore, subject to necessary government approvals, the report said.

The company’s revenue in the second quarter went up by 21 per cent to Rs 36,237 crore over the year-ago-period on the back of higher sales volume and strategic hedging among others, Vedanta said. Vedanta's "depreciation and amortization increased by 24 per cent Y-o-Y and 6 per cent Q-o-Q to Rs 2,624 crore; mainly due to higher depletion charge in oil and gas and amortisation at Zinc India".

The company's gross debt  quarter-on-quarter dropped to Rs 58,597 crore, down by Rs 2,543 crore as on September 30, 2022.

An arm of Vedanta Resources, Vedanta Ltd  is one of the world's leading oil and gas and metals firm with operations across India, South Africa and Namibia.

Key financials

• Consolidated quarterly Revenue of ₹36,237 crore, up 21%YoY
• Generated strong free cash flow (pre capex) of Rs 8,369 crore in 2QFY23
• Achieved consolidated EBITDA of Rs 8,038 crore with EBITDA margin of 25% despite macro challenges
• Proactive strategic hedging for risk management, recorded Rs1,700 crore gain
• Robust double-digit return on capital employed 28%, up 200 bps YoY
• Gross debt decreased Rs 2,543 crore QoQ to Rs 58,597 crore as on 30^th Sep’22
• Net Debt/EBITDA of 0.7x, best among Indian peers
• Healthy cash and cash equivalent of Rs 26,453 crore
• Contributed to exchequer Rs 37,180 crore in 1HFY23
• Record 15.4% dividend yield with Rs 51 per share (Rs 18,933 crore) payout in 1HFY23

Based on average of 31^st March 2022 closing price and 25^th July’22 closing prices.