Vedanta Q3 net profit slips 4 per cent, lags estimates

KOLKATA: India’s leading mining company Vedanta Ltd. reported a 4 per cent decline in net profit in the fiscal third quarter, although a secular uptrend in metal prices drove revenue 19 per cent higher in the period under review.

At Rs 2,053 crore, compared with Rs 2,133 crore in the corresponding period of FY17, the December quarter profit trailed estimates of analysts, who had penciled in earnings north of Rs 2,400 crore. Revenues climbed to Rs 24,361 crore on higher commodity prices and improved zinc and aluminium volumes, helping offset lower sales of iron ore and at Copper India.


Ebitda for Q3 FY18 was at Rs 6,780 crore, up 13 per cent. But one-off costs on account of power import and outages earlier in the year at its aluminium business trimmed the bottomline. The Vedanta scrip fell 0.25 per cent to close at Rs 339.50 on the BSE on Wednesday.

“Our operational performance during the quarter remained strong with volume growth across businesses. The growth in EBIDTA level was 13 per cent y-oy and 17 per cent q-o-q. However, higher prices of some commodities, particularly with respect to aluminium production, affected us,” said Kuldip Kaura, CEO, Vedanta.

The company’s refined zinc-lead metal production was at 245kt (kilo tonne) in Q3FY18, up 7 per cent q-o-q, while a continued ramp-up in its aluminium business saw Q3FY18 production rise 40 per cent y-o-y, with exit production run-rate of 1.8 million tonne per annum.

Vedanta was granted additional iron-ore mining allocation in Goa, while there was an increase in the mining cap at Karnataka. Kaura said that robust commodity prices and improved volumes across its businesses –zinc, aluminium, iron ore and oil & gas – should lead to better realisations in Q4 of FY18.

Vedanta is likely to benefit from underground mining in Rampur Agucha zinc mines. It will also gain from the raising of iron ore mining cap in Karnataka and an expected increase in the cap in Goa, new mining licenses in Jharkhand and the debottlenecking in its oil& gas business.

The company expects its iron ore mining business to return to its pre-ban level output of 20 million tonnes, with an expected increase in mining cap in Goa. Also, Sterlite’s Tuticorin smelter is set to emerge as the largest single location facility when it doubles capacity to 8 lakh tonne per annum in two years, Kaura said. At Zinc India, Vedanta hopes to achieve a capacity of 1.5 million tonne per annum, while output at its oil and gas segment is expected to go up from 300,000 to 5,00,000 barrels per day.