On August 6, 2024, Vedanta Ltd, led by billionaire Anil Agarwal, announced impressive financial results for the first quarter ended June 30, 2024. The mining giant reported a substantial 36.5% increase in consolidated net profit, reaching Rs 3,606 crore compared to Rs 2,640 crore in the same period last year. This remarkable profit surge reflects the company’s robust performance and favorable market conditions.

Financial Performance

Vedanta’s revenue from operations for Q1FY25 rose by 5.6% to Rs 35,239 crore, up from Rs 33,342 crore in Q1FY24. This growth was primarily driven by strong prices of key commodities such as zinc, lead, copper, and nickel during the quarter. Chief Financial Officer Ajay Goel attributed the earnings surge to strong business performance, cost management, and elevated commodity prices.

The company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the first quarter increased by 47% year-on-year (YoY). This significant growth was supported by structural cost-saving initiatives across various business segments, easing input commodity inflation, and favorable output commodity prices. Vedanta reported an EBITDA margin of 34% for the quarter, up from 24% in Q1FY24.

Share Performance and Market Activity

As of 2:57 pm on August 6, Vedanta’s shares were trading 0.3% higher at Rs 415 apiece on the Bombay Stock Exchange (BSE). The company’s strong quarterly performance and positive market sentiment contributed to this uptick in share value.

Debt and Capital Raising

Vedanta’s net debt as of June 30, 2024, stood at Rs 61,324 crore, reflecting an increase of Rs 4,986 crore from Rs 56,338 crore reported on March 31, 2024. Despite the rise in net debt, the company’s net debt-to-EBITDA ratio remained stable at 1.5x, consistent with the previous quarter and down from 1.9x in Q1FY24.

In July, the company successfully raised Rs 8,500 crore through a Qualified Institutions Placement (QIP) at a price of Rs 440 per share. This capital injection is expected to support Vedanta’s ongoing and future business initiatives.

Free Cash Flow and Demerger Update

Vedanta reported a robust free cash flow (pre-capex) of Rs 4,371 crore for the quarter, marking a 41% YoY increase. This strong cash flow performance underscores the company’s operational efficiency and financial health.

Additionally, Vedanta announced that its demerger proposal received approval from 75% of its secured creditors. The company is now preparing to seek clearance from the stock exchanges and will file its demerger plan with the National Company Law Tribunal (NCLT). The proposed demerger is a strategic move aimed at optimizing business operations and unlocking shareholder value.

Outlook

Vedanta’s impressive Q1 results highlight the company’s ability to navigate market volatility and capitalize on favorable commodity prices. With a strong financial performance, effective cost management, and strategic capital raising, Vedanta is well-positioned to sustain its growth trajectory in the coming quarters. The company’s focus on operational efficiency and shareholder value enhancement through its demerger proposal will be closely watched by investors and analysts alike.