Vedanta back in black on sharp decline in tax expenses, posts ₹5,603 cr profit in Q2

Vedanta is back in black as the company posted a net profit of ₹5,603 crore for the September quarter this fiscal, a sharp turnaround from a loss of ₹915 crore in the same period last year. Sequentailly, the profit rose 10% fromr ₹5,095 crore reported in the June quarter.

The company’s profit before tax for the second quarter of FY25 stood at ₹5,765 crore, down 17% from ₹6,954 crore a year ago. However, a significant reduction in tax expenses — from ₹9,092 crore last year to ₹2,030 crore this quarter — boosted the company’s bottom line, contributing substantially to its return to profitability.

Vedanta reported a 3.6% year-on-year decline in revenue from operations to ₹37,171 crore for the September 2024 quarter, down from ₹38,546 crore a year earlier. Sequentially, revenue rose 5.5% from ₹35,239 crore in the June quarter.

Total expenses increased by 1.6% year-on-year to ₹33,169 crore, mainly driven by higher material costs.

Quarterly EBITDA surged 44% year-on-year to ₹10,364 crore, supported by favourable commodity prices, structural cost-saving initiatives, and increased premium across businesses. EBITDA margins stood at 26.1%.

Liquidity improved by 30% year-on-year, with cash and cash equivalents rising to ₹21,727 crore. The company generated free cash flow (pre-capex) of ₹8,525 crore and reduced net debt by ₹4,400 crore sequentially to ₹56,927 crore, achieving a net debt-to-EBITDA ratio of 1.49x, the best position in six quarters.

Segment-wise, the consolidated revenue from the oil and gas segment dropped sharply, down 65.7% year-on-year to ₹2,825 crore. Meanwhile, revenue from zinc, lead, and silver surged 21.3% year-on-year to ₹7,953 crore, while the aluminium segment - the company’s highest revenue contributor - grew 14.9% year-on-year to ₹13,734 crore. Revenue from copper rose 38.4% to ₹6,376 crore, up from ₹4,606 crore in the previous year’s quarter.

Aluminium production hit record highs, with first-half cast metal output reaching 1,205 kt, a 3% increase year-on-year, and second-quarter production at 609 kt, up 3%. The cost of aluminium production declined 4% to $1,734 per tonne, while alumina output rose 8% to 499 kt. Zinc India also recorded all-time highs with first-half metal production at 524 kt, a 5% rise, and quarterly mined and refined metal output climbing 2% and 8% year-on-year, respectively, with the cost of production down 6% to $1,071 per tonne.

“This strong performance is driven by cost efficiency, volume growth, and favourable commodity prices. Additionally, we raised $1.4 billion at Vedanta through a $1 billion QIP and a $400 million HZL OFS. At the same time, with the $1.2 billion VRL bond issuance and ongoing deleveraging, we have reduced Holdco (holding company) debt to $4.8 billion, the lowest level in a decade," chief financial officer Ajay Goel said.

Shares of Vedanta and other metal stocks, including JSW Steel, Tata Steel, and NMDC, saw declines on Friday on the NSE, as market sentiment was dampened by the outcome of China’s National People's Congress (NPC) Standing Committee meeting. The NPC announced a substantial 10 trillion yuan ($1.4 trillion) program aimed at refinancing local government debt, viewing the plan as insufficient to fully address China's economic concerns. Overall, 13 of the 15 Nifty Metal index stocks were in the red amid unease over China’s economic support measures.

Vedanta's shares closed today at ₹456, down 0.41% from the previous day.