Detailed Narrative
Vedanta Power's Demerger and Q1 FY27 Performance
Vedanta Power officially became a demerged entity on May 1, 2026, marking a significant milestone. For Q1 FY27, the company reported a revenue of INR 2,607 crores, representing a 31% year-on-year increase, driven by a 38% year-on-year growth in sales volume to 5,224 million units. Despite this growth, the EBITDA stood at INR 291 crores, impacted by a boiler incident at its Sakti plant, which also led to a negative PAT of INR 59 crores before exceptional items📎. The company maintains a healthy cash and cash equivalents balance of INR 1,130 crores and a stable AA negative credit rating.
Operational Highlights and Fuel Security
Operationally, Vedanta Power demonstrated resilience, with Talwandi Sabo improving its plant availability to 86% from 77% quarter-on-quarter. Meenakshi Energy achieved its highest-ever quarterly EBITDA of INR 112 crores, supported by 1,350 million units in sales volume. The company has robust fuel security, with 85% of its coal requirement backed by long-term linkages. Furthermore, it successfully contained coal costs by 12% year-on-year by replacing imported coal with Indian coal, consuming 65-70% domestic coal in operations, and aims for 100% domestic coal at Meenakshi.
Capacity Expansion and Growth Outlook
Vedanta Power currently operates 4.2 gigawatts of assets and aims to expand this to 4.8 gigawatts by the end of FY27. Longer-term plans include adding another 7.2 gigawatts starting from FY30. Key growth projects, such as the restoration of Sakti Unit 1 and completion of Unit 2, are on track, with Unit 1 expected to start by Q2 FY27 and Unit 2 by Q4 FY27. The company is also pursuing favorable regulatory outcomes, including a potential refund of INR 300 crores and recovery of up to INR 40 crores annually for ash sales.
Group-Level Capital Allocation and Debt Management
At the broader Vedanta group level, a growth capex of INR 20,000 crores is planned for the current year across all five entities. Vedanta Limited (the parent) invested INR 1,148 crores in growth capex in Q1 FY27 and achieved a net debt-to-EBITDA ratio of 0.3x. Vedanta Resources (VRL) has significantly deleveraged, reducing debt from $10 billion to $5 billion, with a target to further reduce it to $3 billion. VRL also refinanced $1.7 billion at 7.4% and secured a $2.25 billion syndicated term loan at 6.4%, aiming for over INR 1,000 crores in annual interest cost savings.
Vedanta Aluminium's Performance and Cost Optimization
Vedanta Aluminium (VAML) reported record Q1 FY27 revenue of INR 21,105 crores and EBITDA of INR 10,499 crores, with hot metal costs at USD 1,698 per ton, down 3% QoQ. The company expects a $175-200 reduction in hot metal costs over the next 3-4 quarters, driven by the ramp-up of Lanjigarh, increased captive bauxite from Sijimali, and the operationalization of Ghogharpalli. VAML also declared its first interim dividend of INR 8 per share, reflecting its strong financial position with a net debt-to-EBITDA ratio of 0.9x.