Vedanta Ltd (VEDL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Your passcode has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded.
Moderator: Ladies and gentlemen, good day, and welcome to Vedanta Limited's second quarter and half year FY '26-'27 earnings conference call.
Moderator: management side we have with us Mr. Charanjit Singh Group Head Investor Relations Mr. Arun Misra Group's CEO and Mr. Ajay Goel Group CFO. As a reminder all participant lines will be in the listen-only mode and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arun Misra for his opening remarks. Thank you and over to you, Mr. Misra.
Arun Misra (Vedanta Ltd): Good afternoon everyone and thank you for joining us. We recorded another strong quarter for Vedanta. EBITDA doubled year-on-year to 9,938 crore INR and the margin improved to nearly 60% from 49% driven by strong operational performance, lower costs and higher commodity prices. Revenue grew 57% year-on-year to Rs 25,812 crore and PAT increased 151% year-on-year to Rs 6,202 crore. With pre-capex free cash flow of Rs 5,803 crore our net debt to EBITDA ratio now stands at 0.1x. Coming to business segment operations Zinc India delivered another record quarter. Mined metal production increased 5% year-on-year to 271 kt while refined metal production rose 7% to 264 kt supported by smelter debottlenecking initiatives. Silver production reached a record 173 tonnes, up 20% year-on-year. Importantly Zinc cost of production declined 29% year-on-year to $1,703 per tonne driven by better mined grades, higher metal production and stronger byproduct realizations. Zinc International delivered 53,000 tonnes of mined metal during the quarter. Black Mountain Mine produced 7.1 kt MIC with stabilization of plant operations. Encouragingly Gamsberg Phase 2 has started its operations positioning the business for a step change in volumes in the coming quarters. FACOR delivered a resilient Q2 FY '27 performance generating EBITDA of $8 million, a 267% increase year-on-year. Ferrochrome production increased 26% year-on-year to 24 kt as chrome ore production reached 50 kt, up 6% year-on-year. The business continues to benefit from 100% captive ore sourcing which significantly strengthens its cost position versus external procurement. In Copper we achieved the highest ever quarterly cathode production of 46 kt, up 15% year-on-year. At our Fujairah operations sales were impacted by supply chain disruptions arising from the closure of Strait of Hormuz although operations have since normalized and we expect quarterly run rates to improve to 20,000 tonnes and more by Q3 FY '27. Beyond our operating assets we continue to strengthen Vedanta's future resources base through the acquisition and advancement of critical mineral blocks across India. Today the group has secured 11 critical mineral blocks covering commodities such as manganese, graphite, vanadium, cobalt, tungsten, nickel and rare earth elements with exploration progressing across multiple blocks. These assets position us well to participate in India's growing critical minerals ecosystem while creating a strong pipeline of future growth opportunities and enhancing long-term resource security. On growth capital expenditure we invested Rs 1,135 crore during the quarter across our priority projects. Key progresses included the commissioning of Gamsberg Phase 2, continued development of 250,000 tonnes per annum integrated zinc smelter at Debari, expansion of FACOR's ferrochrome capacity to 450,000 tonnes per annum and ongoing execution of our copper rod plant in Saudi Arabia where construction is progressing and commissioning is targeted for Q3 FY '27. Additionally at FACOR the 75 MVA furnace expansion remains on track for commissioning in second half of FY '28 while a favorable Orissa High Court order for the Kathpal mine supports the planned restart of mining operations in second half of this current fiscal. These projects will provide visible growth over the coming years. Sustainability remains integral to our strategy. Our renewable round-the-clock power capacity reached 592 megawatt. Greenhouse gas intensity improved to 3.36 tonnes of CO2 equivalent per tonne of metal from 3.93 last year. At Zinc India renewable energy constituted 27% of power consumption while our
Arun Misra (Vedanta Ltd): business achieved 100% renewable power sourcing. We also continued creating meaningful social impact, benefiting over 9 million women and children and supporting nearly 0.5 million families through skilling initiatives. To conclude, the delivery of yet another quarter with EBITDA of approximately 10,000 crores reflects the quality of our assets, disciplined execution, and continued focus on cost leadership. With a strengthened balance sheet, industry-leading margins, and multiple growth projects progressing well, we remain well positioned to deliver sustainable value for all our stakeholders. Thank you. I now hand over to Ajay.
Ajay Goel (Vedanta Ltd): Yeah. Thank you, Arun, and good evening, everyone. I'm happy to report a record quarter for Vedanta Limited following the demerger. Strong operational execution, positive prices, and continued cost management enabled us deliver a record EBITDA and robust free cash flows. More importantly, we continued to strengthen the balance sheet by further deleveraging while maintaining strong liquidity and financial flexibility. Now starting with our financial performance and practically on every single metric, it's a record number. We carried the Q1 momentum firmly into second quarter. Revenue grew by 57% year-on-year to a record 25,812 crores. EBITDA more than doubled, up by 106% year-on-year to our highest ever 9,938 crores. EBITDA margin expanded to record about 60% without copper business, reflecting quality of our assets and focus on cost management. PAT rose by 151% year-on-year, again to a record 6,202 crores. Now in terms of the growth, it is self-funded and we are building capacities. Our operations generated free cash flow pre-growth capex of 5,803 crores in second quarter and about 10,215 crores in H1. We continued to invest on our strategic growth projects with capex amounting to 1,135 crores during Q2 and 2,283 crores during our first half. At Zinc International, Gamsberg Phase 2 was commissioned during the quarter, increasing total MIC capacity to almost 500 KTPA. At FACOR, commencement of ore extraction from Ostapal underground mine marks an important milestone towards strengthening long-term ore security and supporting future expansion. I'll move on now to growth pipeline and which will also provide next leg of value creation. Looking ahead, we continue to advance a portfolio of value-accretive growth projects across businesses while maintaining a disciplined approach to allocation of capital and returns. At Zinc India, we remain committed towards our 2 MTPA production ambition, supported by 250 KTPA Debari smelter expansion and Rampura Agucha tailing reprocessing plant. At Zinc International, we are committed to achieving 1 MTPA MIC production and cost in top quartile. At FACOR, we are progressing our road map to expand Ferro Chrome capacity from 145 KTPA to 500 KTPA. And finally at Copper International, the 125 KTPA copper rod plant at Saudi Arabia remains on track for commissioning in Q3 while plans for an integrated copper value chain at KSA continues to advance. We are also continued to build our future facing mineral portfolio with 11 critical mineral blocks, of which five blocks are already under exploration. Moving on to the balance sheet first half. Now net debt is down to 3,675 crores. With this, the leverage net debt to EBITDA is now 0.1 times amongst the best in the industry. Now Vedanta Limited is on track to turn net cash positive during the coming quarter, which is Q3. We continue to reward shareholders with the first interim dividend of rupees five per share during the quarter. May be a quick word in terms of the parent company Vedanta Resources. So at parent Vedanta Resources, VRL, we made meaningful progress in strengthening the balance sheet and optimizing liquidity profile. In H1 of the current fiscal, we raised 2.15 billions through international bond issuance and secured another 1.85 billion of syndicated term loans.
Ajay Goel (Vedanta Ltd): Net debt now stands at about $5.2 billion at an average borrowing cost of about 7.1% with average maturity extended to over 4.5 years. The VRL rating remains at a decadal high, both S&P and Fitch at double B with stable outlook, and Moody's at Ba3 with positive outlook. In conclusion, Vedanta Limited today is focused operating company with multiple growth engines, Hindustan Zinc, Zinc International, Ferrochrome, Copper, Port and Nicomet. Together with an emerging critical minerals portfolio, they will decisively shape our next phase of growth. Our model is very simple. We generate strong cash, reinvest to expand capacities and reward shareholders. Thank you, and over to operator.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. Anyone who wishes to ask a question may press star and one. First question is from the line of Ashish from Leo Capital. Please go ahead.
Ashish (Leo Capital): Sir on Vedanta, am I audible? Hello?
Ajay Goel (Vedanta Ltd): Yeah, yes Ashish. Please go ahead.
Ashish (Leo Capital): Yeah yeah, perfect. What is likely to be the dividend policy for the of the company going forward? Will you be fully dividending out all the dividends received from Hindustan Zinc? That would be my first question.
Ajay Goel (Vedanta Ltd): Yes, our dividend policy, in fact, which has been adopted by the Vedanta board post demerger is in public domain. And there we made a two changes. So earlier for Vedanta Limited, we had minimum commitment of at least 30% of PAT being paid as a dividend, which now has been made more flexible. Now the board can decide how much they want to pay as a dividend. The second requirement earlier was that zinc dividend will be a pass-through compulsorily. Again, that requirement is now more flexible. So so now it is up to the board. Having said that, our commitment has been we as a group Vedanta Limited, other companies paying between 3% to 5% as dividend yield. And with that, the parent company will keep deleveraging by at least half $1 billion on every single year basis.
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