Vedanta Q3 preview: EBITDA likely to drop on weaker commodity prices. Key factors here | Mint
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Business News/ Companies / News/  Vedanta Q3 preview: EBITDA likely to drop on weaker commodity prices. Key factors here
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Vedanta Q3 preview: EBITDA likely to drop on weaker commodity prices. Key factors here

In Q2 of FY23, Vedanta posted a 60.8% drop in consolidated net profit attributable to owners to ₹1,808 crore from ₹4,615 crore a year ago same quarter. However, consolidated revenue rose by 20% to ₹36,237 crore versus ₹30,048 crore in Q2 of FY22.

The metal sector witnessed a mixed trend in base prices sequentially in Q3FY23.Premium
The metal sector witnessed a mixed trend in base prices sequentially in Q3FY23.

Indian multinational mining company, Vedanta is set to announce its financial results for the third quarter of FY23 on Friday. The Anil Agarwal-backed company will also declare a fourth interim dividend for FY23 for which it has already fixed the record date. Vedanta's Q3 looks rather gloomy as weak commodity prices across segments are likely to impact overall earnings.

Earlier this month, Vedanta announced that the board of directors will consider the fourth interim dividend on January 27. The company fixed February 4th as the record date to determine eligible shareholders for the fourth interim dividend benefits for FY23.

In Q2 of FY23, Vedanta posted a 60.8% drop in consolidated net profit attributable to owners to 1,808 crore from 4,615 crore a year ago same quarter. However, consolidated revenue rose by 20% to 36,237 crore versus 30,048 crore in Q2 of FY22. The company's gross debt decreased by 2,543 crore QoQ to 58,597 crore as of September 31, 2022.

Also, the company posted over a 15.4% dividend yield with 51 per share ( 18,933 crore) payout in 1HFY23.

The metal sector witnessed a mixed trend in base prices sequentially in Q3FY23.

According to ICICI Direct Q3 preview report, overall, in Q3FY23, base metal prices witnessed a mixed trend QoQ wherein lead and copper were up QoQ while zinc and aluminium witnessed a falling trend on a QoQ basis. On the other hand, on a YoY basis all major base metal prices were lower. During the quarter, average zinc prices on the LME were at $3009/tonne, down 10% YoY, 8% QoQ. During the quarter, average lead prices were at US$2104/tonne, down 10% YoY, but up 6% QoQ. For the quarter, average aluminium prices on LME were at $2335/tonne, down 15% YoY, and 1% QoQ. Average copper prices for the quarter on LME were at $8020/tonne, down 17% YoY but up 3% QoQ.

What will be Vedanta's Q3 earnings like?

Kotak Institutional Equities expects a 41% YoY and 11.5% QoQ drop in Vedanta's EBITDA due to weaker commodity prices across segments, lower benefit of hedges unlike the previous quarter, and weak demand.

In its preview report, Kotal said, "We forecast (1) Aluminum EBITDA to decline by -73% yoy but increase +34% qoq mainly led by lower aluminum prices partly offset by sequential coal cost decline (2) Oil and Gas division to witness -5.6% qoq drop in EBITDA due to windfall tax and lower crude prices and (3) Zinc India division to see a -16% qoq drop in EBITDA due to lower Zinc prices."

Kotak expects Vedanta to report net sales of 33,099.4 crore in Q3FY23 down by 3% YoY and 10% QoQ. PAT is seen at 1,194.5 crore lower by 71% YoY and 34% QoQ. EBITDA is factored to come at 6,356.1 crore.

In terms of sector-wise EBITDA, Kotak expects the company's Zinc India EBITDA to decline 17% YoY and 16% QoQ. Zinc International may plunge by 18% YoY and 49% QoQ. Iron Ore EBITDA may dip by 70% YoY and 43% QoQ. Oil and Gas EBITA is likely to slip by 5% YoY and 6% QoQ. Aluminium EBITDA is seen to shed 73% YoY but rise by 34% QoQ. Steel EBITDA is expected to drop by a whopping 97% YoY and 140% QoQ.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 26 Jan 2023, 08:29 PM IST
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