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    Vedanta

    VEDLNeutral
    Metals & Mining·31 Jul 2025
    Management Summary

    Vedanta delivered its strongest-ever Q1 despite global tariff uncertainty and commodity price volatility. Aluminum led with record production and sharp cost reduction driven by lower alumina prices and captive mix improvement. NCLT second motion hearing commenced for demerger. VRL debt continued to decline, reaching $4.8B. Management remains confident of FY26 guidance and targets 1x leverage by year-end.

    Highlights

    7

    • Highest-ever Q1 EBITDA of Rs 10,746 crores, up 5% YoY

    • EBITDA margin expanded 81 bps YoY to 35%, highest in 13 quarters

    • Record Q1 alumina production of 587,000 tons (+9% YoY)

    • Aluminum hot metal cost reduced 12% QoQ to $1,765/ton

    • Zinc India highest-ever Q1 mined metal of 265,000 tons

    • Net debt/EBITDA improved to 1.3x from 1.5x YoY

    • HZL Board approved first phase of 2 MT expansion ($1.4B investment)

    Concerns

    1

    • Demerger delays - MoPNG objections and NCLAT stay on power demerger

    What Changed3

    vs Q3 FY26

    Tone shiftConfident and steady → Confident and forward-looking despite acknowledging macro headwinds from tariffs and commodity price volatilityGuidance items3 → 7 (+4)Risks discussed3 → 5 (+2)

    Key financials

    Single quarter

    07 metrics
    1. 01Revenue₹37,434 Cr+6%YoY
    2. 02EBITDA₹10,746 Cr+5%YoY
    3. 03EBITDA Margin35%
    4. 04Adjusted PAT₹5,000 Cr+13%YoY
    5. 05Reported PAT₹4,457 Cr

    Guidance & targets

    7
    CategoryTargetPriority
    Costs
    Aluminum hot metal cost FY26
    $1,700-1,750/ton
    		High
    Costs
    Alumina cost reduction next 2 quarters
    $80-100/ton reduction
    		High
    Production
    Alumina production FY26
    3-3.1 million tons
    		High
    Production
    Oil & Gas production FY26
    95,000-100,000 boepd
    		Medium
    Balance Sheet
    VRL debt reduction
    $3 billion over 3 years
    		High
    Balance Sheet
    Vedanta India Net Debt/EBITDA
    1x
    		High
    Capex
    Total capital investment plan
    $11 billion (up from $9.5B)
    		High

    Risks & concerns

    6
    RiskSeverity

    Oil & Gas natural decline - MBA fields declining, 93K boepd vs 95-100K target

    Targeting arrest via ASP injection (Aug-Sep start), infill wells (+5,000 boepd), and new wells from FY25 (+8,000 boepd) — Both acknowledged

    medium

    Demerger delays - MoPNG objections and NCLAT stay on power demerger

    MoPNG concerned about disputed dues; NCLAT granted interim stay on TSPL power demerger; next hearings Aug 4 and Aug 20 — Both acknowledged

    high

    Short seller attack - malicious propaganda targeting company

    Management sought legal opinion from ex-CJI; called out 'false narrative guided by vested interest' — Management acknowledged

    medium

    Gamsberg Phase 1 underperformance - 250KT target not achieved despite half decade

    Mining challenges in open pit; now seeing 50%+ QoQ increase; also preparing stockpile for Phase 2 plant — Analyst acknowledged

    medium

    EGA Guinea bauxite supply disruption

    EGA operations suspended; company claims fully tied up with alternative sources for 9MT bauxite needs — Analyst acknowledged

    low

    Areas of Evasion(1)

    • Detailed demerger timeline specifics beyond 'Sep-Oct'

    Q&A highlights

    4

    “H2, we are now set for the hot metal cost sub 1,700... a margin of $1,100 or so as we go into the H2”

    Sub-$1,700 cost + current LME = $1,100+ margin, significant earnings expansion

    asked by Amit Lahoti (Emkay)

    1 min read4 chapters

    Detailed Narrative

    01

    Strongest-Ever Q1 Despite Headwinds

    Vedanta delivered record Q1 EBITDA of Rs 10,746 crores (+5% YoY) with 35% margin (highest in 13 quarters) despite commodity price declines post US tariff announcements. Revenue grew 6% YoY to Rs 37,434 crores. Adjusted PAT at Rs 5,000 crores (+13% YoY). ROCE improved to 25%.

    02

    Aluminum Cost Transformation

    Hot metal cost reduced 12% QoQ to $1,765/ton. Lowest-ever power cost of $491/ton driven by record 89% PLF at captive plants. Captive alumina mix at 50%, targeting 65-70% in H2 with Lanjigarh Train II. Q2 costs expected flat due to planned power plant maintenance. H2 target sub-$1,700. Full year guidance $1,700-1,750/ton.

    03

    Growth Capex Acceleration

    Total capital investment plan increased to $11 billion from $9.5B with $5.9B already spent. HZL Board approved first phase of 2MT expansion at $1.4B. Lanjigarh Train II and 435KT BALCO smelter targeted for Q2 commissioning. Gamsberg Phase 2 at 80%, targeting completion in H2 FY26. 1,300 MW power capacity being added in Q2.

    04

    Oil & Gas Strategy

    Production at 93,200 boepd with OPEX at $15.1/bbl (-11% QoQ). ASP injection in Mangala starting Aug-Sep, expected to add 15,000 boepd in 3-4 quarters. DSF West Coast drilling starting October, potential 18,000 boepd in 1.5 years. Northeast Rudra discovery appraisal planned. KG deepwater targeting 3 wells early next year.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.