Vedanta Q1 Results Review - Low Commodity Prices Weaken Outlook: Systematix

Systematix Research Report

Vedanta Ltd.'s Q1 FY24 consolidated Ebitda at Rs 64.2 billion (-37% YoY, -32% QoQ) was 7% below our estimate.

Vedanta posted weak performance across segments despite higher volumes, the impact of which was offset by lower commodity prices.

Aluminium/oil and gas/ zinc international segment Ebitda fell 17%/45%/52% YoY due to low aluminium, zinc, and oil prices.

Among the key businesses, aluminium production grew 2% YoY to 579 kilo tonne, while the cost of production fell 27% YoY.

FY23 dividend payout of Rs 299 billion (Rs 80/share) helped reduce debt at parent Vedanta Resources Ltd. by $2 billion. We believe elevated dividend is likely to be a drain on cash and lead to rising levels of debt already seen in the last two quarters.

Net debt increased by Rs 139 billion during the quarter due to sustaining capex and dividend payout, resulting in a deterioration in the net debt/Ebitda ratio to 1.88 times from 1.28 times as on March 2023.

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