Vedanta’s March Quarter Profit Nearly Doubles On One-Time Gain

Vedanta Ltd.'s profit rose beating estimates in the January-March quarter, aided by an exceptional gain.

The net profit stood at Rs 4,802 crore, an increase of 81.4 percent compared with the December quarter, according to the company's exchange filing. That compares with the Rs 2,579 crore profit estimated by analysts tracked by Bloomberg. Billionaire Anil Agarwal-led company reported a one-time gain of Rs 2,870 crore on reversal of an earlier impairment in the oil and gas business.

Revenue of India's largest metals-to-mining conglomerate rose 22.7 percent year-on-year to Rs 27,630 crore, surpassing the estimate of Rs 25,098 crore.

Plans to ramp up volumes were on track, resulting in significantly higher pre-tax earnings for the year despite rising cost pressures, Kuldip Kaura, chief executive officer of Vedanta Resources Plc said in a separate media statement. “In 2019, our focus is to generate strong cash flows on the strength of higher volumes and improved cost structure in our businesses.”

The company is betting on higher prices for raw materials and increasing demand as it plans expansions in India and Africa. The aluminum market remains volatile amidst
policy changes by U.S. on sanctions against Rusal, Kaura said in a conference call. The sanctions are proving to be “a double-edged sword” as it has led to higher aluminum prices that benefit Vedanta, but at the same time raised the cost of key raw material alumina, he added.

Vedanta Chairman Anil Agarwal had said last month that aluminum was in a sweet spot due to a lack of fresh capacity addition globally and uncertainties arising out of the Rusal sanctions.

Other Highlights

• Earnings before interest, tax, depreciation and amortisation rose 6.6 percent to Rs 7,837 crore
• Operating margin narrowed to 28.4 percent from 32.7 percent.
• Vedanta is planning a capital expansion of $1.5 billion for the current financial year.

Shares of Vedanta closed 1.02 percent higher ahead of the earnings. The stock declined 15.7 percent during January-March period, the biggest quarterly decline in over two years. That compares with a 3.9 percent decline in the country's benchmark Nifty.

Watch this interview with Vedanta Resources CEO Kuldip Kaura.