Mumbai: Shares of Vedanta Ltd slipped 3.6% in early trade on Monday due to tepid first quarter performance that fell short of analysts’ expectation.

Vedanta’s revenues in the June quarter fell about 3.5% year-on-year to 21,167 crore. Softer realisations in key product segments led to a lower growth in revenues.

Analysts expected a far better show on earnings before interest, tax, depreciation and amortization (Ebitda) front. But this too disappointed. Ebitda fell 20% on year to 5,188 crore in the first quarter.

Some of the disappointment on the Ebitda front has been due to lower production. For instance, oil production fell 11% y-o-y in the first quarter, with output declining in most of its oil fields. To top it, average realisations fell a marginal 1% y-o-y in US dollar per barrel.

A positive has been the significant fall in cost of aluminium production, thanks to higher coal linkage and utilisation of captive coal mines. Cost of production in the business was at $284 per tonne, the lowest in the last two years.

But much of this cost saving did not translate into better margins from this business as prices on the London Metal Exchange remained subdued.

Its steel business is also feeling the pinch of lower prices. Besides, some of its business is exposed to the spot market where weak prices hurt more. As a result, Ebitda margin in the steel business fell 14.75% year-on-year to $104 per tonne.

Unwinding of its Anglo stake in parent entity Vedanta Plc did little to cheer equity investors. The management assured its minority shareholders it will not undertake transactions in structured products where the underlying is equity and derivatives going forward. While this has removed the uncertainty, the market seems to remain unimpressed.

Global uncertainties could continue to keep commodity prices weak. “We believe that non-ferrous commodities outlook remains clouded with the US-China trade war," analysts at Emkay Global Financial Services Ltd said in a note to clients.

Much depends on whether the company can improve its operating performance and further cut costs in a low realisation environment.

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