Vedanta Q4 Results Review - Revenue Beats Estimate; Ebitda Inline: Motilal Oswal

Motilal Oswal Report

Vedanta Ltd.’s consolidated net sales stood at Rs 379 billion (down 5% YoY/up 11% QoQ) in Q4 FY23, 7% above our estimate of Rs 353 billion. Revenue growth was fueled by better performance across all the verticals (especially aluminum, copper and iron ore) during the quarter.

Vedanta’s consolidated Ebitda was at Rs 95 billion (down 31% YoY/up 34% QoQ) in Q4 FY23, in line with our estimate of Rs 91 billion. Aluminum vertical grew 93% QoQ to Rs 19 billion; Hindustan Zinc Ltd. was up 15% QoQ to Rs 43 billion and iron ore vertical jumped ~five times QoQ to Rs 3.6 billion. All the verticals were profitable during the quarter.

Vedanta’s adjusted profit after tax stood at Rs 32 billion (down 50% YoY/up 106% QoQ) against our estimate of Rs 37 billion. The miss was led by higher finance cost and depreciation, partially offset by higher other income and lower taxes.

London Metal Exchange prices across the non-ferrous portfolio improved QoQ. Zinc/lead/copper/aluminum prices were up 4%/2%/12%/3% on a QoQ basis.

The company’s sales volumes across the sector improved QoQ (except the oil and gas vertical). Sales for steel/aluminum/zinc/iron ore rose 30%/2%/5%/ 21% in Q4 FY23.

Vedanta’s net debt stood at ~Rs 445 billion and net debt/Ebitda rose to 1.3 times in FY23 from 0.5 times in FY22.

Coal linkage for the aluminum business stood at 66% and with the commissioning of Jamkhani mines it should improve further to 80% by end FY24, thereby lowering cost of production in the coming quarters.

Vedanta’s total dividend payout for FY23 stood at Rs 101.5 per share.

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