Vedanta (VEDL) Q4 16/17 earnings summary

Executive summary

• FY17 revenue rose 12% to ₹76,171 crore and EBITDA rose 41% to ₹21,437 crore, supported by higher volumes, cost efficiencies and recovering commodity prices.

• Attributable PAT before exceptional items and DDT was ₹7,323 crore, 2.6x the prior year; reported profit attributable to owners was ₹5,512 crore.

• The Cairn India merger simplified the structure and combined low-cost metals, mining and oil & gas assets; the merger became effective on April 11, 2017.

• Record production in several businesses and a robust balance sheet supported confidence in further growth, though commodity volatility and execution risks remain.

Financial highlights

• Consolidated revenue was ₹76,171 crore, up 12% YoY; ramp-ups in Aluminium and Power, resumed Iron Ore operations and improved commodity prices drove the increase.

• EBITDA was ₹21,437 crore, up 41% YoY, with a 39% EBITDA margin; volume growth, cost efficiencies and higher prices supported the gain.

• Consolidated profit after tax was ₹9,873 crore; profit attributable to owners was ₹5,512 crore, versus a ₹12,270 crore attributable loss in FY16.

• Free cash flow reached ₹13,312 crore; cash and liquid investments were ₹63,471 crore at March 31, 2017.

• Q4 EBITDA was ₹7,275 crore; sequential EBITDA margin expanded by ~500 bps to 44% at year-end.

Outlook and guidance

• Aluminium production was targeted at 1.5–1.6 Mt in FY18, excluding trial runs; hot metal cost guidance was US$1,475–1,500/t, with Q1 expected higher.

• Zinc India targeted refined zinc-lead production of ~950 kt and silver output above 15 moz in FY18; mined metal was expected to exceed FY17 levels.

• Oil & Gas guidance called for Rajasthan production of ~165 kboepd and net capex of US$250m in FY18; longer-term projects target potential production of 300 kboepd.

• Zinc International production was expected at ~160 kt in FY18; Gamsberg first production remained on track for mid-CY18, with 9–12 months of ramp-up to 250 ktpa.

• FY18 priorities included continued ramp-ups, Gamsberg progress, lower interest costs and refinancing upcoming maturities; capex was to favor high-return, low-risk projects.