Vedanta (VEDL) Q4 17/18 earnings summary

Executive summary

• FY2018 was a record-volume year, with ramp-ups in Zinc India and Aluminium, stronger commodity prices and higher revenue and EBITDA; outlook emphasized further production growth in FY2019.

• Growth priorities centered on Oil & Gas and Zinc, alongside the Gamsberg start-up, expansion projects and disciplined capital allocation.

Financial highlights

• Consolidated revenue rose 22% YoY to ₹92,923 crore; EBITDA increased 19% to ₹25,470 crore, while adjusted EBITDA margin was 36% versus 39% in FY2017.

• Profit after tax was ₹13,692 crore; attributable PAT after exceptional items was ₹10,342 crore, up 49% YoY. Attributable PAT before exceptional items and DDT was ₹8,025 crore, up 10%.

• Basic EPS was ₹28.30; EPS before exceptional items was ₹26.17, while EPS before exceptional items and DDT was ₹21.96 versus ₹24.70 in FY2017.

• FCF post capex was ₹7,880 crore versus ₹13,312 crore in FY2017; gross debt was ₹58,159 crore and cash and liquid investments were ₹36,201 crore.

• Net debt was ₹21,958 crore versus ₹8,099 crore in FY2017, reflecting dividends and the AvanStrate acquisition; ROCE improved to 17.5% from 15%.

Outlook and guidance

• FY2019 outlook called for higher volumes and lower costs, with measured, higher YoY investment focused mainly on organic Oil & Gas and Zinc growth.

• Oil & Gas FY2019 production guidance was 220–250 kboepd, with sub-US$7/boe opex and net capex of US$600–800 million; FY2020 volume target was 275–320 kboepd.

• Zinc India expected FY2019 silver production of 650–700 tonnes and pre-royalty cost of US$950–975/t; project capex guidance was ~US$400 million.

• Aluminium targeted FY2019 production of 2 mt and a cost reduction of US$120–170/t, implying cost of US$1,725–1,775/t at FY2018 input-price assumptions.

• Growth capex was expected to rise from ₹5,306 crore in FY2018 to ~₹9,700 crore in FY2019, primarily due to higher Oil & Gas spending.