Analyst Concall
Vedanta sees parent co cost of funding fall to single digit
This story was originally published at 23:29 IST on 8 November 2024
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--Vedanta: Will achieve record high operating profit in FY25
--Vedanta: Looking for partners for our east coast project
--Vedanta: Will see higher alumina cost for 2 months
--CONTEXT: Comments by Vedanta mgmt in post-earnings analyst concall
--Vedanta: Demerger process is in last leg, will be done in FY25
--Vedanta: See growth opportunity in ramp-up of alumina unit in Lanjigarh
By Apratim Sarkar and Anand JC
Mumbai - Vedanta Ltd. said the ongoing deleveraging and refinancing drive will help its parent company, Vedanta Resources Ltd., achieve a single-digit cost of funding by the end of 2024-25 (Apr-Mar) or Apr-Jun FY26. The management, in a post-earnings analyst call Friday, said the interest obligations of Vedanta Resources will be covered through brand monetisation, while the principal amount will be financed through routine dividends.
Vedanta hopes that these deleveraging efforts will help the parent company become self-funded. The debt of Vedanta Resources has been reduced by INR 4.7 billion in the last two-and-a-half years, the lowest in a decade, the company said.
The management of Vedanta said its demerger into seven distinct companies will conclude by the end of current financial year as it is in the final stage. Vedanta’s management expressed its confidence about delivering strong earnings in the coming quarters, driven by a robust project pipeline and strategic investments.
Vedanta's operating profit in Apr-Sept hit a record high of INR 206.39 billion. The company expects its full year earnings before interest, taxes, depreciation, and amortisation to be at a record high as well. Historically, the company’s Apr-Sept EBITDA accounts for 40% of its full year reading. The management expects Vedanta's monthly earnings before interest, taxes, depreciation, and amortisation run-rate to be more than INR 650 million by the end of March.
The company also sees growth opportunity through the ramp-up of its alumina unit in Lanjigarh.
The company's iron ore business faced challenges in Apr-Sept, the management said. The company's mining unit in Goa was unable to dispatch iron ore due to lack of transportation permits in the June quarter. Additionally, heavy rainfall further impacted iron ore production in the September quarter, the management said.
Vedanta expects a ramp-up of its zinc international project phase two in Oct-Mar and in FY26. The company also expects its key businesses such as zinc international, iron ore, and steel to see improved momentum in the coming months.
Vedanta said it is looking for partners for their deep water east coast project as it has material volume. On the east coast region, Vedanta is working on a fibre exploration campaign which will start production in March.
Vedanta reported a net profit of INR 43.52 billion for the September quarter on revenue of INR 376.34 billion. Friday, shares of the company closed flat at INR 457.90 on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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