Vedanta slips after Q2 revenue declines

Vedanta's consolidated net profit rose 44% to Rs 2,730 crore on a 3% decline in net sales to Rs 21,739 crore in Q2 September 2019 over Q2 September 2018.

Revenue declined primarily due to lower commodity prices partially offset by additional volumes from commencement of Gamsberg operations and higher sales at iron ore Karnataka.

Attributable profit after tax (PAT) for the quarter was Rs 2,158 crore, up 61% compared with Rs 1,343 crore in Q2 September 2018.

EBITDA for Q2 September 2019 was at Rs 4,497crore, lower by 15% y-o-y, mainly due to lower commodity prices, partially offset by additional volumes from commencement of Gamsberg operations, higher sales at Iron Ore Karnataka and easing of input commodity inflation.

EBITDA margin fell to 25% in Q2 September 2019 compared with 26% in Q2 September 2019.

Finance cost for Q2 September 2019 was at Rs 1,340 crore, lower by 9% y-o-y, primarily due to reduction in gross borrowings, while on a sequential basis the finance cost remained flat.

Exceptional item primarily is a charge of Rs 504 crore, relating to impairment at Avanstrate Inc, partially offset by accrual of interest against pending claims at TSPL based on Supreme Court order giving a net charge of Rs 422 crore.

Section 115BAA of the Income-tax Act, 1961 has been introduced by the Taxation Laws (Amendment) Ordinance, 2019. Based on the expected timing of exercising of the option under Section 115BAA by the respective entities, the group has re-measured its deferred tax balances leading to a deferred tax credit of Rs 2,501 crore on deferred tax balances as at 31 March 2019 being recognized in the current quarter. Normalised tax rate for the quarter is 32% as against 27% last quarter.

Commenting on company's Q2 performance, Srinivasan Venkatakrishnan, chief executive officer, Vedanta, said, "We are at an exciting transition that will see the company accelerate in the expansion of its reserves and resource base over coming quarters. This expansion is being delivered through strict capital allocation and balance sheet focus aimed at creating value for our stakeholders. As we look forward to the year, we have in place the building blocks to enhance our performance in the three key businesses. We have immense confidence in being able to deliver the best from our assets and people whilst always being committed to our core values around ethics, governance and social responsibility."

The net debt fell by Rs 8,322 crore to Rs 20,081 crore on 30 September 2019 compared with its debt during 30 September 2018, primarily due to free cash flow generation during the period and realisation of power debtors at TSPL.

Shares of Vedanta fell 1.82% at Rs 145.55. Meanwhile, the Nifty 50 index was trading 0.3% higher at 11,875.40.

Vedanta is a natural resource company engaged in the business of manufacturing copper and copper products, and aluminum and aluminum products.

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