Vedanta Q2 profit rises 20% to Rs 2,986 cr, but operating margin contracts

Moneycontrol News

Diversified company Vedanta's second quarter consolidated profit grew by a higher-than-expected 20 percent on higher sales and operating income across segments barring power. A CNBC-TV18 poll had estimated net income at Rs 2,230 crore for the quarter.

Net profit for the quarter increased to Rs 2,986 crore against Rs 2,495 crore in same quarter last fiscal.

Revenue from operations during the quarter jumped 36 percent year-on-year to Rs 21,590 crore on higher volume at Copper India, Zinc India, Zinc International, ramp up at aluminium business and higher commodity prices partially offset by currency appreciation, lower volumes at oil & gas, the company said.

EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 21.3 percent to Rs 5,669 crore, but margin contracted by 159 basis points to 26.26 percent compared with corresponding quarter.

"PAT and EBITDA growth was on the back of solid operational performance in zinc and copper businesses, supported by strong commodity prices," Kuldip Kaura, Chief Executive Officer, Vedanta said.

"We expect second half of FY18 of this fiscal year to be more robust with the continuing production ramp up and we continue to maintain a strong balance sheet and remain focused on creating long term shareholder value," he added.

Other income was lower by 36.3 percent year-on-year at Rs 876 crore, mainly due to lower investment corpus at Zinc India following with special dividend payout of Rs 13,985 crore in March-April 2017 and lower mark to market gain on investments.

Exceptional gains of Rs 186 crore also boosted profitability.

".... was relating to reversal of royalty of Rs 291 crore at Zinc India due to write back of excess District Mineral Foundation liability for the period January 12, 2015 to September 16, 2015 pursuant to a judicial pronouncement during the quarter. This was partially offset by Rs 109 crore of exploratory assets write off at oil & gas business," Vedanta reasoned.