Vedanta LtdQ3 FY24
Vedanta Ltd Q3 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹310P/E: 12.3Market Cap: ₹1.1L CrSector: Diversified Metals
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- →Vedanta Limited expects continued growth driven by robust project pipeline and strategic investments with milestones anticipated within 9 to 12 months.
- →Major capital projects are set to be completed across key business segments, boosting momentum in the second half of FY '25.
- →Monthly EBITDA run rate expected to exceed Rs. 650 million by FY '25 close, indicating strong revenue growth.
- →Aluminum production anticipated to ramp up with Lanjigarh Refinery's Train 2 commissioning in Q3 FY '25 and full ramp-up by Q1 FY '26, targeting around 4 to 5 million tons next year.
- →BALCO smelter expansion and volume debottlenecking projects will increase aluminum capacity to 3.1 million tons with 90% value-added products.
- →Zinc International Phase 2 expansion expected to fully ramp-up during FY '26.
- →Iron ore operations recovering post permits acquisition, aiming for annual production of 11 million tons in FY '25.
- →Overall, Vedanta forecasts an even stronger EBITDA and growth in FY '26.
Margin guidance
Category 3- →Vedanta reported a strong Q2 FY25 with a 44% YoY EBITDA growth and 230% YoY PAT before exceptionals growth, indicating robust momentum.
- →Highest-ever first half EBITDA of Rs. 20,639 crores, up 46% YoY, with second half typically contributing 60% of annual EBITDA, expecting record FY25 EBITDA.
- →Anticipated monthly EBITDA run rate > Rs. 650 crores by FY25 close; FY26 projected to see even stronger EBITDA.
- →Key capital projects in aluminum, zinc, power, and glass segments to complete in next 9-12 months, supporting growth.
- →Cost optimization initiatives and operational efficiencies to sustain competitive margins.
- →Alumina ramp-up at Lanjigarh, power cost reductions, and operational excellence expected to boost aluminum profitability.
- →Vedanta Resources refinancing to reduce interest costs to single digits, aiding free cash flow and profitability.
- →Focus on deleveraging and demerger to unlock value and support sustainable earnings growth.
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Fundraise plans
Yes- →Vedanta Resources Limited (VRL) is actively refinancing $1.2 billion of bonds between November and January to lower funding costs by about 3%, resulting in annual savings over Rs. 300 crores.
- →The bank loans at VRL will be refinanced or repaid as they become due.
- →The private facility (PCF) from Standard Chartered ($850 million) next installment is due in April 2025; 400 million will be paid then, partly through brand fees.
- →Vedanta Limited raised $1 billion (about Rs. 8,500 crores) through Qualified Institutional Placement (QIP) in July 2024, the largest metals and mining issuance in India, aimed at deleveraging and reducing interest costs by over Rs. 1,000 crores annually.
- →Additional $400 million was raised via an Offer for Sale for Hindustan Zinc Limited in August 2024 to augment the capital base.
- →Fundraising for a $1 billion investment at Konkola Copper Mines over five years is in progress but hasn't yet added to VRL debt.
Order book
The transcript from Vedanta Limited's Q2 FY25 earnings call does not explicitly mention details about the company's current or expected order book or pending orders. The discussion primarily focuses on:
- Financial performance, debt repayment schedules, and refinancing plans.
- Production ramp-up in alumina and aluminum segments.
- Progress on projects like glass business recapitalization and alumina refinery expansions.
- Capital structure, capital expenditure, and capacity expansions.
- Operational efficiencies and cost optimization.
- Corporate actions, including demerger and refinancing.
- Hedging positions in zinc and aluminum.
No specific data or commentary is provided related to order book size, new orders, or backlog status in the given pages of the transcript.
Capex plans
Yes- →**Power Sector:**
- → - Full commissioning of Meenakshi Power Plant (1,000 MW) this fiscal year.
- → - Board approved CAPEX of ₹5,209 crores for 1,200 MW Athena Power Plant.
- → - Secured ₹3,900 crores project financing for Athena plant.
- → - Target to generate 5 GW commercial power within 18-20 months.
- →**Glass Business:**
- → - Post stake acquisition, plans to recapitalize and rebuild furnace in Taiwanese operations.
- → - Actions expected in the current quarter to enhance incremental profits.
- →**Oil & Gas:**
- → - Ongoing and upcoming drilling campaigns on East and West Coast.
- → - Five-year exploration program starting March; large-scale ASP injection projects.
- → - Plans to spud deepwater well in about a year, with potential >5 TCM volumes.
- →**Alumina Expansion:**
- → - Ramp-up at Lanjigarh refinery planned, targeting about 3 million tons run-rate soon.
- →**KCM Copper:**
- → - $1 billion investment over 5 years on top of prior $3 billion spent.
- → - Focused on rapid ramp-up of a globally significant copper ore body.
How does Vedanta Ltd rank vs peers in Diversified Metals?
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