VEDL Q3 FY24 earnings call.
A source-linked concall view: reported numbers, management language, guidance, commitments and risks that should carry forward.
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Revenue
₹35,541 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
₹8,677 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Vedanta delivered a strong Q3 FY24 with INR 34,968 crore in revenue (highest ever Q3) and INR 8,677 crore EBITDA, driven by cost compression across zinc and aluminum businesses. EBITDA margin expanded 438bps QoQ to 29%, with PAT surging 112% QoQ to INR 2,868 crore. Aluminum delivered record quarterly production of 599,000 tons with COP declining to $1,735/ton, while Zinc India achieved lowest cost in 10 quarters at $1,095/ton. Management targets $6-7 billion annual EBITDA through debottlenecking across all segments. $8.4 billion strategic CapEx program with 3-year payback is underway, though net debt rose to INR 62,493 crore due to CapEx deployment. The demerger scheme awaits SEBI NOC before NCLT filing, with ESL/steel divestment expected to close in Q1 FY25. Key risks include Gamsberg mining constraints, rising oilfield service costs, and elevated debt levels at the parent level.
Colored figures show movement against the previous available record.
Guidance to track
- With debottlenecking projects across all businesses, Vedanta targets $6-7 billion annual EBITDA, with $7 billion achievable if top-line targets are met after completing expansion projects.
- Aluminum business targets cost of production of $1,600/ton annually with 2.5M tons capacity, potentially delivering $2.6B EBITDA. Current Q3 COP is $1,735/ton with March 2024 target of $1,700/ton.
- Capital expenditure expected to be slightly lower than prior $1.7B guidance, at approximately $1.5-1.6 billion for FY24. Full year guidance with volume and COP updates will be provided next quarter.
- Non-core asset disposition (ESL/steel) process ongoing with data rooms, Q&A, and site visits completed. Expecting firm pricing by Q4 FY24 end with deal culmination in Q1 FY25.
Risks flagged
- Gamsberg underperformed despite improved recoveries due to ore availability and contractor issues, with FY25 target still outstanding.
- Rising rig costs and polymer expenses pose margin pressure. Management expects $12-13/barrel OpEx range and is implementing cost optimization through new field monetization and reduced polymer usage with ASP injection.
- India Ratings downgraded Vedanta Limited citing high-cost borrowing, though management disagreed and pointed to CRISIL's AA- reaffirmation. Engagement with India Ratings ongoing for potential upgrade.
- Net debt increased to INR 62,493 crore from INR 57,770 crore due to strategic CapEx deployment, partially offset by robust cash flows. VRL debt of $1.8B maturing in FY25 remains a consideration.
Key quotes
- With our outstanding portfolio of low cost, high return assets, multi-commodity presence, strong balance sheet, and commitment to safe operations, we are well positioned to capitalize on India's growth and deliver value to our shareholders.
- This quarter, we also improved EBITDA margin to 29%, reflecting a significant enhancement of 438 basis point margin, mostly coming from our programs around cost compression across businesses, specifically in zinc and aluminum.
- Sometimes more than one respectable point of view is quite possible... we are engaging with India Ratings, and we are very hopeful that very soon even they will give us an upgrade to double A.
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