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Mining giant Vedanta published its Q2FY23 results wherein the company reported a 54% YoY decline in profits.
The company reported net sales of Rs 36,237 crores during the quarter that ended in September 2022, growing 21% YoY and 5.3% QoQ. Aluminum production was up by 3% QoQ with improved operational and buying efficiency. Integrated zinc, refined lead, and silver production increased by 16%, 22%, and 28% YoY respectively.
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Net Profits, however, declined to Rs 2,690 crores from Rs 5,812 crores reported during the corresponding quarter last year, declining 53.71% YoY! EBITDA also saw a 24% YoY decline to stand at Rs 8,038 crores.
Finance cost has increased by 54% YoY due to an increase in average debt and average rate of borrowing. The company also had a 24% YoY higher depreciation cost due to an increase in depletion charges in its oil and gas business and amortization in Zinc India, a subsidiary of Vedanta.
"I am pleased to share that we have generated strong free cash flow (pre capex) of ₹8,369 crore underpinned by robust operational and financial performance. I am also happy to inform that Vedanta has entered in the club of top 10 DJSI ranked global metals and mining companies; ranking 6th globally." said Sunil Duggal, CEO of Vedanta.
Moreover, the company has also been downgraded by global credit ratings giant Moody's. Its current rating is 'B3' which indicates high credit risk. The basis of such a rating was the mining company's weak liquidity, high refinancing requirements, and looming debt.
For the future, the company has announced that its Board has approved a CAPEX for improving the Balco Rolled Product capacity and Balco smelter at a revised cost of Rs 595 crores and Rs 8,094 crores, subject to government approvals.
Despite poor quarterly results and a degradation in its credit rating, the company's shares currently trade around Rs 287.75 per share, up 2.5%.
Article by Avinash Jha.
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