Vedanta Q1 Results FY22-2023

The multinational mining company, Vedanta, declared its financial results for the first quarter of FY23 on 28th June 2022. In its report, the company displayed a profit after tax (PAT) of Rs. 4,421 crore in Q1 FY23, a stable growth of 4.66% YoY (year on year) from Rs. 4,224 crore in Q1 FY22. 

Vedanta achieved its best-ever first quarter EBITDA, which was recorded at Rs. 10,741 crore in Q1 FY23, up 7% YoY. Vedanta also displayed a strong industry leading EBITDA margin of 32%. The Net Debt/EBITDA ratio was maintained at low levels and stood at 0.6x.

The revenue from operations of the company were recorded at Rs. 38,251 crore in Q1 FY23, growing 36.1% YoY from Rs. 28,105 crore in Q1 FY22. This can be attributed to continued strong operating performance across key businesses of the company.

The operational highlights of the company include a 3% YoY growth in Aluminium production, which stood at 565 kt. As for the Zinc (India) segment, Q1 FY23 marked the highest ever first quarter refined metal production, which was recorded at 260 kt, up 10% YoY. This quarter also saw the highest ever quarterly ore production of 140 kt, up 14%YoY.

However, production of saleable iron ore at Karnataka was down 14% YoY and production of saleable steel was down 7% YoY. Moreover, the average gross operated production of Oil and Gas was down 10% YoY in Q1 FY23, due to a natural decline, largely offset by infill wells and gas production.  

The return on capital employed of the company improved by 780 bps YoY, and stood at ~30%. Vedanta also had a strong liquidity position, with cash and cash equivalents being recorded at Rs. 34,342 crore in Q1 FY23.  

During the quarter, the first interim dividend was declared for Rs. 31.5 per share. The second interim dividend of Rs. 19.5 per share was declared in July, recording a dividend yield of 15.4%. The basic earnings per share (EPS) of the company came in at Rs. 11.92 in Q1 FY23 as against Rs. 11.40 in Q1 FY22. Ahead of the result, the Vedanta share closed in the green at Rs. 245.40 per share, up 0.82% from the previous day’s closing price.

Hits

• PAT stood at Rs. 4,421 crore in Q1 FY23, a stable growth of 4.66% YoY.
• The best-ever first quarter EBITDA was recorded at Rs. 10,741 crore in Q1 FY23, up 7% YoY. 
• Vedanta displayed a strong industry leading EBITDA margin of 32%.
• Revenue from operations were recorded at Rs. 38,251 crore in Q1 FY23, growing 36.1% YoY.
• Return on capital employed improved by 780 bps YoY, and stood at ~30%.
• 3% YoY growth in Aluminium production.
• Zinc (India) segment marked the highest ever first quarter refined metal production at 260 kt, up 10% YoY.
• Highest ever quarterly ore production of 140 kt, up 14%YoY. 
• The first interim dividend was declared for Rs. 31.5 per share. Second interim dividend was declared for Rs. 19.5 per share.
• EPS stood at Rs. 11.92 

Misses

• Production of saleable ore at Karnataka was down 14% YoY. 
• Production of saleable steel was down 7% YoY. 

Segment-wise revenue 

• Zinc, Lead and Silver (India): Revenue increased 45.11% YoY to Rs. 9,175 crore in Q1 FY23 from Rs. 6,323 crore in Q1 FY22.
• Zinc (International): Revenue increased 30.38% YoY to Rs.1,459 crore in Q1 FY23 from Rs. 1,119 crore in Q1 FY22.
• Oil & Gas: Revenue increased 64.31% YoY to Rs. 4,083 crore in Q1 FY23 from Rs. 2,485 crore in Q1 FY22.
• Aluminium: Revenue increased 42.69% YoY to Rs. 14,644 crore in Q1 FY23 from Rs. 10,263 crore in Q1 FY22.
• Copper: Revenue increased 20.46% YoY to Rs. 4,215 crore in Q1 FY23 from Rs. 3,499 crore in Q1 FY22.
• Iron Ore: Revenue decreased 13.26% YoY to Rs. 1,367 crore in Q1 FY23 from Rs. 1,576 crore in Q1 FY22.
• Power: Revenue increased 44.49% YoY to Rs. 1,770 crore in Q1 FY23 from Rs. 1,225 crore in Q1 FY22.
• Others: Revenue increased 13.10% YoY to Rs. 1,856 crore in Q1 FY23 from Rs. 1,641 crore in Q1 FY22.

What the management says 

Mr Sunil Duggal, Chief Executive Officer, Vedanta, said “I am pleased to report that we have started FY23 with strong performance, underpinned by our world class assets and strength of our business model. We recorded best-ever 1Q EBITDA of ₹10,741 crore and PAT of ₹5,592 crore despite inflationary cost pressures. This year, our key priorities will be delivery on committed volumes, timely execution of projects for growth, value addition, vertical integration & cost reduction across our key businesses, and proactive commodity price risk management. We are continuing work on our renewed ESG purpose of “Transforming for Good”. We have increased the number of women in decision-making bodies to 29% and are also among the few Indian companies that have actively recruited members from the transgender community as part of our workforce. I am also happy to inform that we will start reporting our Scope 3 emission from FY22 Sustainability report, three years before our stated timeline. We strongly believe in ‘Atmanirbhar Bharat Abhiyan’ to make India self-reliant. We are one of the highest contributors to the national exchequer. We are the only domestic private player contributing 25% of India’s Oil & Gas production.” 

Other things to know

• Vedanta completed internal carbon pricing, climate risk assessment, and scope-3 emission inventorisation.
• Cairn signed a contract to harness geothermal energy from its re-purposed Oil and Gas wells.
• Jharsuguda deployed India's largest fleet of electric forklifts. 
• India’s 1st Battery Electric Vehicle (BEV) in UG Mine was introduced at HZL’s Zawar mine.
• Vedanta was certified as a ‘great place to work’. The company has 29% women in decision making bodies. It also employed 9 transgenders in the workforce.

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Research Analyst: Bavadharini KS