Vedanta shares in focus amid mixed Q1 results; Motilal Oswal lowers target to Rs 480

Shares of Vedanta will be in focus on Friday after the mining and metals major reported an 11.7% year-on-year (YoY) decline in its consolidated net profit to Rs 3,185 crore for the June quarter of FY26, compared to Rs 3,606 crore in the same quarter last year.

Sequentially, profit attributable to owners declined 8.5% from Rs 3,483 crore in Q4 FY25.

However, revenue from operations rose 5.75% YoY to Rs 37,824 crore. The company also posted its highest-ever first-quarter EBITDA at Rs 10,746 crore, up 5% YoY, with margins improving by 81 basis points to 35%. Net debt-to-EBITDA stood at 1.3x, and its credit rating was reaffirmed at AA.

Segment-wise performance

Aluminium:

Alumina production hit a record 587 kt, rising 9% YoY and 36% QoQ. Cast metal aluminium output stood at 605 kt, flat QoQ. The company reported the lowest hot metal cost (ex-Alumina) in 16 quarters at $888/tonne, while the overall cost of production dropped 12% QoQ.

Zinc India:

Mined metal output reached a record 265 kt, up 1% YoY, while zinc alloy production at HZAPL helped raise value-added product share to 24%. Zinc India’s cost of production dropped 9% YoY to $1,010/tonne.

Zinc International:

Production surged 50% YoY and 12% QoQ to 57 kt. Gamsberg output rose 74% YoY. Overall cost of production fell 21% YoY to $1,269/tonne.

Oil & Gas:

Q1 output stood at 93.2 kboepd, impacted by natural declines in the MBA fields, partially offset by new wells in Aishwarya and other fields.

Iron Ore, Steel & Copper:

Saleable iron ore output rose 42% YoY to 1.8 million tonnes. Pig iron production touched 213 kt (+4% YoY), and Ferro Chrome output rose 150% QoQ to 28 kt. Copper cathode output stood at 44 kt, up 119% YoY.

Power:

Power sales rose 33% QoQ. Meenakshi Power Plant (650 MW) became fully operational in July, and Unit 1 of the 600 MW Athena plant was also commissioned.

Management Commentary

“Our 1Q performance has set a strong foundation for the year ahead. Amidst global market volatility, we delivered the highest-ever first quarter EBITDA. Operationally, we achieved the lowest hot metal cost (ex-Alumina) in the last 16 quarters, the lowest-ever 1Q Zinc India CoP, a 74% YoY increase in Gamsberg's production, a 33% QoQ surge in power sales, and a 150% QoQ jump in Ferro Chrome volumes. The ramp-up of the Lanjigarh refinery to 587kt demonstrates our progress toward ..

Looking ahead, the company said that the commissioning of Train II at Lanjigarh, a 435kt smelter capacity at Balco and 1300 MW of new thermal power capacity, all in 2Q, will enable the company to deliver its full-year guidance.

Further, the start of operations at the Sijimali bauxite mine and Kuraloi coal mine in H2 is likely to boost our performance to a record high.

Brokerage view

Motilal Oswal

Motilal Oswal revised Vedanta’s target price to Rs 480 from Rs 490, maintaining a ‘Neutral’ rating.

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The brokerage said operational performance was in line, supported by lower finance costs and higher other income. It added that capex initiatives are progressing well, and improved cash flows should aid expansion and debt reduction. Estimates for FY26 and FY27 remain unchanged.

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