Vedanta Ltd Posts Strong Bottom Line Growth; Aluminium Operation Shines

Vedanta Ltd. reported a strong performance in its March quarter, with a sharp rise in aluminium segment operating profit and revenue, and a robust growth in India revenue from zinc, lead, and silver businesses. However, the consolidated net profit of ₹34.83 billion for the March quarter was below analysts' expectation of ₹37.20 billion.

The company’s consolidated net profit was up 2.5 times on a year basis but down 1.8% sequentially. The on-year growth of 2.5 times was the highest in 14 quarters. Vedanta’s consolidated revenue from operations increased by 14% on year and 3.4% sequentially, reaching ₹404.6 billion, which was above the street estimate of ₹386.9 billion.

The consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA) of Vedanta jumped 30% year-on-year to ₹116.18 billion, with the EBITDA margin expanding sharply by 465 basis points to 35%. The company’s revenue and EBITDA performance in the March quarter were largely driven by the aluminium segment, which reported a substantial 29% increase in revenue to ₹159.7 billion and a 55% rise in EBITDA to ₹46.6 billion.

Sequentially, however, the aluminium segment’s revenue was up by only 4%, and EBITDA increased by only 2.6%. The aluminium revenues were primarily driven by a rise in prices, while the EBITDA was aided by a non-material increase in the cost of alumina production.

Vedanta’s earnings performance for the March quarter was also aided by the Zinc India segment, which reported a 21% on year rise in revenue to ₹88.1 billion and a 33% rise in EBITDA to ₹48.11 billion. This revenue growth was largely due to higher zinc and silver prices in the international markets.

However, the oil and gas segment dragged down Vedanta's consolidated revenue growth in the March quarter, with a 21% fall in revenue to ₹26.6 billion and a 20% decline in EBITDA to ₹12.1 billion. The average oil price realisation declined by 7% on year to $70.9 per barrel in January-March.

In the iron ore and steel segment, Vedanta reported a 38% on year fall in iron ore revenue to ₹15.3 billion and a 7% decline in steel revenue to ₹18.8 billion in the March quarter. The iron ore EBITDA fell sharply by 44% on year to ₹3.1 billion, while the steel EBITDA increased to ₹1.51 billion, up from an EBITDA loss of ₹160 million in the year-ago quarter.

In January-March, Vedanta’s copper segment saw a 22% increase in revenue to ₹61.4 billion, but it recorded an EBITDA loss of ₹490 million, which was higher than the year-ago EBITDA loss of ₹120 million. The revenue growth came amid an 11% on year increase in LME copper prices to $9,340 per tonne in the March quarter, according to Vedanta.

In the power segment, EBITDA fell substantially by 42% on year to ₹1.31 billion. The company’s Zinc International segment recorded a 75% on year revenue growth to ₹11.1 billion, with the segment’s EBITDA rising sharply to ₹4 billion from ₹590 million in the year-ago quarter.

Vedanta provided guidance for 2025-26 (April-March) in its post-earnings investor presentation. The company expects alumina production in 2025-26 to be between 3.0-3.1 million tonnes, and aluminium production to be between 2.5-2.6 million tonnes. The cost of production for aluminium is projected to be $1,700-$1,750 per tonne.

Vedanta’s net debt at the end of March was reduced to ₹532.5 billion, from ₹573.6 billion at the end of December. For 2024-25, Vedanta’s consolidated net profit increased 3.5 times to ₹149.9 billion, while consolidated revenue from operations rose by 6% to ₹1.53 trillion.