Vedanta — Q1 FY26 earnings call

Call held 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

  • 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

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

Key financials

  1. Revenue ₹37,434 Cr +6%YoY
  2. EBITDA ₹10,746 Cr +5%YoY
  3. EBITDA Margin 35%
  4. Adjusted PAT ₹5,000 Cr +13%YoY
  5. Reported PAT ₹4,457 Cr
  6. ROCE 25%
  7. Net Debt ₹58,220 Cr

What they filed

Q1 FY27: revenue up 53.6%, net profit up 77.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue37,634 17,063 16,686 15,754 18,747 −50%21,337 +25%24,609 +47%24,205 +54%
EBITDA9,828 5,013 5,246 4,276 4,915 −50%6,521 +30%7,559 +44%8,501 +99%
Net profit5,603 4,876 4,961 4,457 3,479 −38%7,807 +60%9,352 +89%7,918 +78%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Costs

  • Aluminum hot metal cost FY26 Costs · FY26 · High confidence $1,700-1,750/ton
    the hot metal cost for the year will be in the range of 1,700 to 1,750

    — Anup Agarwal

  • Alumina cost reduction next 2 quarters Costs · Q2-Q3 FY26 · High confidence $80-100/ton reduction
    next two quarters, we expect a cost reduction of closer to $80 to $100

    — Anup Agarwal

Production

  • Alumina production FY26 Production · FY26 · High confidence 3-3.1 million tons
    we are targeting three to 3.1 million tons of alumina production for the year

    — Deshnee Naidoo

  • Oil & Gas production FY26 Production · FY26 · Medium confidence 95,000-100,000 boepd
    FY '26, we are targeting a range of 95,000 to 100,000 barrels of oil equivalent per day

    — Deshnee Naidoo

Balance Sheet

  • VRL debt reduction Balance Sheet · 3 years · High confidence $3 billion over 3 years

    From $4.8 billion today

    VRL will deleverage 3 billion over the 3 years. That commitment remains unwavered

    — Ajay Goel

  • Vedanta India Net Debt/EBITDA Balance Sheet · FY26 end · High confidence 1x

    From 1.3x today

    our leverage ratio from 1.3x will improve to 1x by the current fiscal

    — Ajay Goel

Capex

  • Total capital investment plan Capex · Long term · High confidence $11 billion (up from $9.5B)

    Previously $9.5 billion → $11 billion (up from $9.5B)

    total capital investment plan from $9.5 billion to $11 billion, of which $5.9 billion has already been spent

    — Deshnee Naidoo

Risks & concerns

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

    high

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

    Both acknowledged

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

    medium

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

    Both acknowledged

  • Short seller attack - malicious propaganda targeting company

    medium

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

    Management acknowledged

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

    medium

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

    Analyst acknowledged

  • EGA Guinea bauxite supply disruption

    low

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

    Analyst acknowledged

Areas of evasion (1)

  • Detailed demerger timeline specifics beyond 'Sep-Oct'

Q&A highlights

3 direct
Aluminum cost trajectory Direct
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)

Oil & Gas production recovery plan Direct
once we are through with the full-scale injection, in three to four quarters, we expect the additional gain of around 15,000 barrels per day from ASP

ASP injection starting Aug-Sep is critical to arrest natural decline and meeting 95-100K boepd guidance

Asked by Aditya Welekar (Axis Securities)

MoPNG demerger objections Partial
they did express concern about the payments of any of the disputed dues that may become payable by Cairn

MoPNG objections could delay demerger; corporate guarantee structure being worked out

Asked by Pallav Agarwal (Antique)

Brand fee to VRL Direct
current arrangement of 3% brand fee is valid till 2029 next 4 years. So, 3% continues

Brand fee remains unchanged at 3% until 2029, a significant ongoing cash drain from VEDL to VRL

Asked by Jatin Damania (Svan Investments)

1 min read 4 chapters

Detailed narrative

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%.

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.

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.

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.

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