Vedanta Q3 Results Review - Cost Efficiency Improves Margins Across Segments: Systematix

Systematix Research Report

Vedanta Ltd.’s Q3 FY24 consolidated Ebitda at Rs 85 billion (+20.7% YoY, -25.7% QoQ) was 7% above our estimate largely due to lower-than-expected cost of production. Vedanta reported consolidated revenue of Rs 355 billion (+4.2% YoY and -8.7% QoQ), 2% below our estimate.

It posted strong performance across segments helped by higher volumes and lower cost of production partially offset by lower commodity prices. Aluminium/Iron ore segment Ebitda rose 200%/12 times YoY led by higher volumes and low cost of production. The steel segment also saw a sharp recovery in Ebitda at Rs 1.07 billion after reporting an Ebitda loss of Rs 660 million in Q3 FY23.

Among the key businesses, aluminium production grew 5.8%/0.8% YoY/QoQ to 599 kt, while the cost of production fell 19.3%/4.4% YoY/QoQ to $1,735/tonne. Zinc International segment reported a significant decline, with Ebitda reported at Rs 620 million (-80%/-78% YoY/QoQ) due to lower throughput and prices.

Vedanta's net debt increased by Rs 47 billion/Rs 244 billion YoY/QoQ largely due to capex spends of Rs 43.5 billion and dividend payout of Rs 49.7 billion during the quarter, resulting in marginal deterioration in the net debt/Ebitda ratio to 1.7 times from 1.6 times as of September 2023.

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