This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Vedanta Ltd ( BOM:500295 ) delivered a strong operational performance across its demerged entities, with Vedanta Aluminum achieving record quarterly revenue and EBITDA, driven by all-time high aluminum production of 632 kT and a 45% year-on-year revenue increase.
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The company's balance sheet strengthened significantly, with Vedanta Aluminum's net debt-to-EBITDA ratio improving from 1.3x to 0.9x, and the entity closing the quarter with over INR 6,000 crore in cash, enhancing financial flexibility.
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Cost discipline was evident across segments: Vedanta Aluminum's hot metal cost fell 3% quarter-on-quarter to $1,698 per ton, while Vedanta Oil & Gas reduced direct operating costs by 3% to $17.4 per barrel through efficiency programs.
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Growth projects are progressing on track, including the Sijimali bauxite mine expected to start this quarter, the Bokaro expansion receiving Stage 1 forest clearance, and the Balco potline ramp-up targeting full production by Q2 FY27.
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Credit rating upgrades were secured for multiple entities, with Vedanta Ltd receiving an AA+ rating from CRISIL and ICRA, and Vedanta Power being upgraded to AA- with a stable outlook, reflecting strong credit profiles.
Negative Points
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Vedanta Oil & Gas experienced a 3% quarter-on-quarter revenue decline due to lower production volumes from natural reservoir decline, partially offset by higher crude prices.
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Vedanta Power's overall performance was impacted by a one-time exceptional item of INR 487 crore, dragging reported EBITDA down despite strong operational delivery.
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Alumina production at Vedanta Aluminum was 6% lower sequentially due to issues in the power plant's red mud handling system, affecting output.
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Copper International sales dropped 51% year-on-year as supply chains in the Middle East were disrupted by geopolitical tensions, impacting revenue from that segment.
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The company faces near-term cost headwinds, with Vedanta Aluminum expecting marginally higher costs in Q2 due to planned power plant shutdowns during the monsoon period, and Vedanta Oil & Gas production continuing to face natural decline challenges.
Q & A Highlights
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Q: On the overall capital allocation at the VRL level, can we assume that the large part of deleveraging is behind us given the refinancing, and going forward, the focus will be more on growth? What sort of debt or leverage level is comfortable before considering paying dividends, and at what stage will spending on the next phase of expansion begin? A: (Ajay, CFO of Vedanta Limited) The deleveraging at VRL has been accomplished to a large extent, with debt down from $10 billion to $5 billion as of June 30th. The path forward is to bring it down from $5 billion to $3 billion. On a consolidated basis, leverage is expected to go from 0.9x to 0.7x by March. The central theme is capital allocation, not capital building. With a current EBITDA run rate of $9.5-10 billion and a cash conversion of 20%, the total free cash flow is roughly ?54,000-55,000 crore at Vedanta India on a consolidated basis. This allows for both growth and deleveraging. The group CapEx for the current year is about ?20,000 crore ($2.5 billion), and shareholders will also be rewarded through dividends. You don't have to make a choice between investing for growth and deleveraging; both can coexist given the robust free cash flow.
Q: For the aluminum business, the annualized run rate for production over the last three quarters is almost 1.1 million tons. How do you plan to achieve the 4.1 million ton target for the full year? Is it more second-half heavy, and are you confident of achieving that number? A: (Rajesh, CEO of Vedanta Aluminum) Monsoon months are slightly difficult for both power assets and aluminum production. We expect much higher volume in H2, following the same trajectory as previous years. We will meet the estimate of 4 to 4.1 million tons of aluminum production from Vedanta.
Q: On the aluminum cost, despite alumina costs going up and captive integration going down, your cost of production has gone down. What has been the delta in purchased alumina cost this quarter? A: (Anup, CFO of Vedanta Aluminum) The cost has come down 3% quarter-on-quarter. As articulated in the last earnings call, with higher captive L/E and API as we go into Q2, we will start seeing alumina costs closer to $750. We reported $780 in Q1. With an increased captive mix of 70-72% in Q2 and lower API, we are on route to that $750 number.
Q: For the demerged entity, given the high CapEx for growth projects, can we assume that most of the dividend would now come from aluminum? What is the quantum in terms of dollars? A: (Ajay, CFO of Vedanta Limited) Historically, the payout was high, but the last commitment was to go down to a normalized 3-5% on the combined market capitalization, which is about a $1.5 billion payout on a consolidated basis for all five businesses. The dividend is a board matter, but one can look at the combined market cap of each business and apply the 3-5% range. One may also assume that roughly half the dividend will come from Vedanta Aluminum going forward.
Q: What are the key cost-saving and operational efficiency measures for the aluminum business over the next couple of years, and can you quantify them? A: (Rajesh, CEO of Vedanta Aluminum) The current hot metal cost is $1,700 per ton. In 3-4 quarters, we expect the cost to go down by $75 to $200. The savings will come from the ramp-up of the Lanjigarh refinery (currently at 70-72% capacity, ramping to 5 million tons), and the ramp-up of captive bauxite from the Sijimali mine. 70% of the savings will come from these initiatives, and we expect to start realizing them in 2-3 quarters.
Q: For the oil and gas business, oil prices have gone up by around 30%, but production is down by 4-5%. Why has revenue remained flat quarter-on-quarter? A: (Arpit, CFO of Vedanta Oil & Gas) Due to the seasonal nature of our sales, about 85% of the volume was sold. Post-monsoon, this will get corrected. The production decline is the reason the numbers are flat.
Q: For the power business, what are the approvals required for the restart of the Shakti energy plant, and what is the current status? A: (Rajendra, CEO of Vedanta Power) The contractor is already working on the revival, and 26% of the revival work has been completed. We plan to start Unit 1 by the end of September or the first week of October. There are no hurdles. The major approval required is from the boiler inspector, who has been intimated. For Unit 2, we want to complete it by the end of this year, and we are not seeing any further issues.
Q: For the steel business, what are the next key hurdles and milestones for completing the expansion of the Bokaro Phase 2 project? A: (Naveen, CFO of Vedanta Iron & Steel) We received Stage 1 forest clearance this quarter. We are in the process of getting Stage 2 clearance, which we expect by the end of this financial year. By the end of this fiscal year, we will be able to complete the expansion project.
Q: For the Sijimali bauxite mine, what are the remaining approvals and timelines for starting mining? A: (Rajesh, CEO of Vedanta Aluminum) We have received Stage 2 forest clearance. The final approval needed is the consent to operate, which we expect to get in this quarter. After the monsoon, we plan to start the mine. Bauxite mining is easier than coal, with very little overburden. We have already appointed an MDO partner, so as soon as we get the approval, mining can start.
Q: For the demerged entity, what is the expected CapEx for this year and next year for Vedanta Aluminum and Balco separately? A: (Anup, CFO of Vedanta Aluminum) For FY27, we expect total CapEx to be around ?5,000 crore. Of this, ?
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
