Vedanta ends FY25 on a high, but soft commodity prices may slow the party down

Metals and mining major Vedanta Ltd reported record profits in the fourth fiscal quarter due to favourable commodity prices, higher production volumes and a reduction in expenses.

This helped the company more than double its profit year-on-year to ₹4,961 crore—its best-ever fourth quarter performance. Revenue was 14% more year-on-year at ₹39,789 crore.

But can it sustain this momentum in the face of macro headwinds? For instance, prices of aluminium, Vedanta’s biggest profit centre, have softened in recent weeks following the US-led escalation of trade tensions. Similarly, other commodities like zinc also face price corrections after a stellar run last fiscal.

Analysts at JP Morgan cut Vedanta’s FY26-27 Ebitda guidance by 7-8% earlier this month after pencilling in lower London Metal Exchange (LME) prices for aluminium, zinc and lead. LME is the leading international commodity exchange

“We do see some impact due to prices coming down. But we don’t anticipate we will be losing on our profitability just because LME prices are fluctuating,” said Arun Misra, executive director of Vedanta.

"We are absolutely focused on cutting our costs while increasing our volume to spread our fixed costs,” Misra said.

To reduce its cost of production, the company is betting on operationalizing new alumina capacity at Lanjigarh, which will reduce its reliance on imports. It expects its alumina capacity to reach 4 million tonnes per annum by the end of FY26, from about half of that at the end of FY25.

Alumina is an intermediate in the production of aluminium.

The company also plans to operationalize the Sijimali bauxite mine and coal mines during the latter half of FY26 to reduce its input costs further. Bauxite is the ore from which alumina is extracted for further processing into aluminium. The company expects these measures to reduce its aluminium production cost by 10-15% by the end of FY26.

Record year

During the quarter ended 31 March, the company reported earnings before interest, tax, depreciation and amortization (Ebitda) of ₹11,618 crore, nearly a third higher year-on-year.

Ebitda margin at 35% was 5 percentage points more on-year.

For the full fiscal year FY25, Vedanta reported a consolidated profit of ₹25,009 crore, nearly double that of the year before. Revenue grew by a tenth to ₹1.5 trillion. Ebitda was 37% higher at ₹43,541 crore, with an Ebitda margin of 34%—a 7-percentage-point improvement year-on-year.

“This quarter concludes a year of exceptional achievement in FY25, where we not only delivered the highest-ever annual volumes for aluminium and zinc but also drove costs of production (CoP) down significantly, reaching four-year lows for zinc India CoP and ex-alumina CoP at aluminium,” Misra said in a press statement.

“With multiple volume expansion projects set for completion in FY26, we remain confident in our ability to deliver another strong year,” he added.

The company’s board gave Misra another year as an executive director starting 1 June, pending shareholder ratification. Last week, he was given a similar extension as the chief executive of Hindustan Zinc, the cash cow of the Vedanta Group.

Vedanta said that its planned demerger into five separately listed companies was on track and would be completed by 30 September. This, despite a challenge by a Chinese vendor earlier this year, threatened to derail the demerger of its power production unit into a separate company. However, the company said it was confident of resolving the conflict in time to meet its 30 September deadline.

The company ended the fiscal year with gross debt of ₹73,853 crore. Net debt stood at ₹53,251 crore. This translated to a net debt to Ebitda ratio of about 1.2 times, compared to 1.4 in December 2024 and 1.5 in March 2024.

The Vedanta Ltd scrip gained 0.7% to close at ₹419.15 on the BSE on Wednesday. The benchmark Sensex ended the session marginally in the red.