Vedanta Q2 Results Show Profit Crash Amid Revenue Growth
Vedanta Ltd reported a sharp 59% year-on-year (YoY) drop in consolidated net profit to ₹1,798 crore for Q2 FY24, despite a 6% revenue rise to ₹38,546 crore. The profit slump was driven by lower commodity prices, rising input costs, and one-time tax provisions.
Key Financial Snapshot
- Revenue: Up 6% YoY to ₹38,546 crore
- Net Profit: Plunged 59% to ₹1,798 crore
- EBITDA: Fell 31% to ₹8,640 crore
- Margins: Contracted to 22.4% from 34.9% (Q2 FY23)
Why Did Vedanta’s Profits Decline?
1️⃣ Weak Commodity Prices: Zinc, aluminum, and oil prices dropped YoY.
2️⃣ High Operational Costs: Coal and energy inflation hurt margins.
3️⃣ Tax Dispute Provision: ₹2,023 crore one-time charge.
4️⃣ Subsidiary Drag: Hindustan Zinc’s weak performance impacted earnings.
Segment-Wise Performance
- Aluminum: Higher volumes but margin pressure from energy costs.
- Zinc & Lead: Hit by falling global prices.
- Oil & Gas: Steady output and crude prices helped.
- Iron Ore: Improved volumes but Goa regulatory issues persisted.
Debt & Dividend Concerns
- Net debt: ₹59,192 crore (slightly lower QoQ).
- Aggressive dividends to parent Vedanta Resources raised sustainability worries.
Management’s Roadmap
CEO [Name] emphasized cost controls and stable metal demand:
“We expect better realizations in H2 FY24 with government infrastructure spending and cost optimization.”
Analyst Reactions
- Morgan Stanley: “Equal Weight” due to debt risks.
- JP Morgan: Cautious on commodity volatility.
- ICICI Securities: “Hold” with guarded optimism.
What to Watch Next?
- Vedanta Resources’ debt repayment plans.
- Mining policy changes and export duties.
- Global commodity price trends.
Bottom Line
While Vedanta’s revenue growth offers hope, its profit crash highlights commodity-sector volatility. Strategic cost cuts and debt management will decide its FY24 recovery.
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