Vedanta Limited Q1 FY27 Earnings Call Summary

Revenue

Margin

Demand

Guidance

Tone

Metrics raised 2

Power capacity target raised to 4.8 GW by end FY27, with additional 7.2 GW targeted from FY30 (from current operating capacity of 4.2 GW)
Gamsberg Phase 2 capacity target raised to 450 KT upon commissioning in August

Metrics cut 3

Aluminium hot metal cost target cut by $175–$200/ton over 3–4 quarters (from current $1,698/ton)
Zinc International cost target cut to $1,200/ton at 450 KT (from current $1,549/ton)
VRL debt target cut to $3B over two years (from $5B)

Vedanta Limited - Q1 FY2027 Earnings Call Summary
[Q1 FY2027 | Date not specified in transcript]

Event Participants

Executives

10
Ajay Goel, Anup Agarwal, Arpit Mundra, Arun Misra, Jim Das, Navin Jaju, Pankaj Jha, Pankaj Sharma, Rajesh Kumar, Rajinder Ahuja

Analysts

12
Abhishek Poddar, Akhilesh Kumar, Amit Murarka, Ashish Kejriwal, Indrajit Agrawal, Jasandeep Singh, Pinakin, Raashi, Ritesh Shah, Sabri, Shubham Jain, Sumangal Nevatia

Financials & KPIs

Metric	Reported	Commentary
Revenue (continuing operations)	₹23,456 crores	Up 51% YoY; driven by higher commodity prices and volumes across zinc, copper, silver, ferrochrome
EBITDA	₹8,469 crores	Highest ever; margin 57%, up 985 bps YoY; supported by strong commodity cycle and cost discipline
PAT	₹5,294 crores	Up ₹152 crores YoY on like-to-like basis; best-ever Q1 for demerged Vedanta
Net Debt / EBITDA	0.3x	Among the best in industry; leverage substantially below pre-demerger combined 0.9x
Cash & Cash Equivalents	₹19,922 crores	Strong liquidity buffer; growth CapEx of ₹1,148 crores in Q1 funded from internal accruals
ROCE	28%	Improved on higher earnings and disciplined capital allocation
Aluminium Revenue	₹21,105 crores	All-time high; up 45% YoY, 13% QoQ, driven by higher realisations and volumes
Aluminium EBITDA	₹10,499 crores	Up 134% YoY, 24% QoQ; EBITDA per ton expanded to $1,804 from $1,511 QoQ
Aluminium Production	632 KT	All-time high; up 5% YoY, 3% QoQ; sales at 615 KT
Alumina Production	826 KT	Up 41% YoY; down 6% QoQ due to stabilization issues in power plant, red mud filtration and bauxite handling
Hot Metal Cost	$1,698/ton	Down 4% YoY, 3% QoQ; in line with FY27 guidance of $1,650–$1,700/ton
Oil & Gas Revenue	₹2,507 crores	Down 3% QoQ on lower sales volumes despite higher Brent prices
Oil & Gas EBITDA	₹1,232 crores	Up 16% QoQ; margin 49%; supported by higher Brent prices
Oil & Gas Production (gross)	77.7 kboepd	Working interest 51.1 kboepd; Rajasthan 63.1, offshore 11.6, OALP 3.1
Oil & Gas Unit Opex	$17.4/bbl	Down 3% QoQ; driven by workover/well intervention efficiencies
Power Revenue	₹2,607 crores	Up 31% YoY; sales 5,224 million units, up 38% YoY
Power EBITDA	₹291 crores	Impacted by Sakti boiler incident; Meenakshi delivered highest-ever quarterly EBITDA of ₹112 crores
Iron & Steel Revenue	₹3,662 crores	Up 18% YoY; EBITDA ₹515 crores, up 54% YoY; margin up 300 bps to 14%
Zinc India Refined Metal Production	260 KT	Up 4% YoY; lowest-ever cost of production at $851/ton
Copper India Sales	53 KT	Up 3% YoY; highest Q1 sales in 8 years

Geographic & Segment Commentary

Vedanta Aluminium: Delivered a record quarter with all-time-high revenue of ₹21,105 crores and EBITDA of ₹10,499 crores. Production at 632 KT, alumina at 826 KT, and value-added products at 389 KT (up 14% YoY). Renewable energy supply from Serentica grew 60% QoQ to 198 MW; captive bauxite/coal projects (Sijimali, Kuraloi) progressing to further lower costs.
Vedanta Oil & Gas: Gross operated production averaged 77.7 kboepd, with Rajasthan contributing 63.1 kboepd. Revenue of ₹2,507 crores (-3% QoQ) and EBITDA of ₹1,232 crores (+16% QoQ) on higher Brent prices. Unit opex fell 3% QoQ to $17.4/bbl via rigless interventions and well productivity programmes.
Vedanta Power: Sales up 38% YoY to 5,224 million units; revenue ₹2,607 crores (+31% YoY). EBITDA was impacted by the Sakti boiler incident (₹487 crores exceptional), but Meenakshi posted best-ever quarterly EBITDA of ₹112 crores. Company targets 4.8 GW by end FY27 and additional 7.2 GW from FY30; 74% of volumes secured under PPAs and 85% of coal under long-term linkage.
Vedanta Iron & Steel: Revenue grew 18% YoY to ₹3,662 crores and EBITDA 54% YoY to ₹515 crores, with margin expanding 300 bps to 14%. Steel sellable production at 582 KT; iron ore output at 2.6 MT (+4% YoY). Bokaro expansion on track for end FY27; ductile iron pipe project in Goa expected later this year.
Zinc India: Refined metal production rose 4% YoY to 260 KT with lowest-ever cost of $851/ton. Silver contributed 46% of EBIT. Growth projects include fertilizer plant cold commissioning, Dariba hot acid leaching, and a 250 KTPA smelter expansion due by Q2 FY29.
Zinc International: Overall mine metal production 48 KT; Gamsberg output 45 KT (+10% QoQ) with cost down 7% QoQ to $1,549/ton. Gamsberg Phase 2 commissioning in August lifts capacity to 450 KT. BMM moved to a variable cost model through end-to-end contract substitution.
Copper & Ferrochrome: Copper India sales at 53 KT (+3% YoY), highest Q1 in 8 years; Copper International rod sales down 51% YoY due to Middle East geopolitical tensions. FACOR delivered record ore production of 153 KT (+41% YoY) and best-ever quarterly EBITDA of ₹101 crores, aided by 100% captive ore.
Vedanta Resources (VRL): Credit ratings upgraded to BB/BB-equivalent by S&P, Fitch and Moody's. Debt reduced by ~~$1.1 billion in Q1 to ~$5 billion; VRL sold 1.7% stake in Vedanta Ltd (~~$200 million). A broader $5 billion refinancing programme targets ~280 bps reduction in funding costs, yielding >₹1,000 crores annual interest savings.

Company-Specific & Strategic Commentary

Demerger & Value Creation: Demerger effective 1 May 2026; combined market cap of resulting companies grew over ₹71,000 crores in Q1. Each entity now has a standalone listing, sharper accountability and independent board. Real estate assets (~2,000+ acres at Vedanta Ltd alone) are targeted for demerger into a pure-play company, with an aspirational value of ₹13,000+ crores.
Capital Allocation & Deleveraging: Group free cash flow expected ~$5 billion in FY27; capex of ~₹20,000 crores across five entities and deleveraging of ~₹20,000 crores at Vedanta India can proceed simultaneously. VRL debt targeted to fall from $5 billion to $3 billion in two years; VRL raised $1.7 billion international bonds at 7.4% (8.5-year average maturity) and a $2.25 billion syndicated loan at 6.4%.
Growth Pipeline: Key commissioning milestones include Gamsberg Phase 2 (August 2026), BALCO Potline 3 full ramp-up by current quarter end, Sakti Unit 1 restart (end Q2 FY27) and Unit 2 (Q4 FY27), Bokaro expansion (end FY27), Sijimali bauxite (post-monsoon), and Kuraloi coal (this quarter). Zinc India's tailing reprocessing plant is due by Q4 FY28; the 3 MTPA aluminium expansion remains on the drawing board with details expected in ~a quarter.
Cost Leadership & Backward Integration: Aluminium hot metal cost at $1,698/ton with guided potential to decline $175–$200/ton in 3–4 quarters (70% from alumina/bauxite, balance from coal). Oil & Gas unit opex at $17.4/bbl; Zinc India cost at $851/ton; FACOR benefits from 100% captive ore.
Shareholder Returns: Vedanta Aluminium declared its first interim dividend of ₹8/share (~$175 million accrue to VRL). Group targets a 4–5% dividend yield on each listed entity's market capitalisation; boards now have descriptive (rather than prescriptive) payout flexibility. No inter-company loans or deposits are planned among the demerged entities.
Ratings & Balance Sheet: Vedanta Ltd upgraded to AA+/Stable by ICRA and CRISIL (highest in a decade); VRL at BB/BB-equivalent; Vedanta Aluminium and Iron & Steel also upgraded. India Ratings still at AA- with watch, but management expects an upgrade within weeks.

Guidance & Outlook

Metric	Guidance / Outlook	Commentary
Aluminium hot metal cost (FY27)	$1,650–$1,700/ton	Unchanged guidance; Q2 likely marginally higher due to planned power plant shutdowns during monsoon; 3–4 quarters out, cost expected down $175–$200/ton
Lanjigarh alumina production (FY27)	~4–4.1 million tons	H2-heavy trajectory due to monsoon impact on Q1–Q2 volumes
BALCO aluminium volumes	~260–270 KT in FY27; +190 KT in FY28	Full capacity commissioning by end of Q2 FY27; total 435 KT from expansion by FY28
Sijimali bauxite mine	1–2 MT FY27; 6–7 MT FY28	Mining expected after monsoon, subject to consent to operate; MDO partner already appointed
Kuraloi coal mine	~2 MT FY27; 8 MT FY28	Mining lease and mine opening permission received; production starts this quarter
Sakti power units	Unit 1 restart end Q2 FY27; Unit 2 completion Q4 FY27	Revival ~26% complete; insurance claims notified for Unit 1
Power capacity	4.8 GW by end FY27; +7.2 GW from FY30	Current operating capacity 4.2 GW
Zinc International	Gamsberg Phase 2 commissioning in August; capacity to 450 KT	Near-term volume goal 300 KT; cost target of $1,200/ton at 450 KT
Vedanta Ltd CapEx (FY27)	Growth ₹7,000 crores + maintenance ₹4,000 crores	Zinc India accounts for ~70% of maintenance capex; growth capex split ₹5,000 crores Zinc India, ₹2,000 crores others
VRL debt	$5B → $3B over 2 years	FY28 cash need ~$1B (loan repayment $330M, interest $350M, KCM $350M); FY29 ~$730M; funded by brand fee + 3–4% dividends
Consolidated EBITDA outlook	~$9.5–10B for FY27 (Vedanta India)	With ~10% EBITDA-to-cash conversion, free cash flow ~$5B (₹45,000 crores); supports ₹20,000 crores capex and ₹20,000 crores deleveraging
Dividend policy	4–5% dividend yield per listed entity	Boards retain flexibility; VAML declared ₹8/share interim dividend for Q1

Risks & Constraints

Risk	Context
Sakti boiler incident	Impacted Q1 power EBITDA (₹487 crores exceptional charge). Unit 1 restart scheduled end Q2 FY27 and Unit 2 by Q4 FY27; delays would push back growth and cash flows. Insurance claims have been notified and are covered.
Geopolitical tensions (Middle East)	Copper International rod sales fell 51% YoY on supply chain disruption; aluminium carbon/furnace oil costs were inflated. Continued instability could pressure margins, though management expects normalisation.
Import coal price volatility	Import coal prices rose over 60% YoY; Vedanta Power mitigated by substituting domestic coal (65–70% at Meenakshi, targeting 100%). Further price spikes remain a risk.
Natural production decline (Oil & Gas)	Gross operated production is moderating due to reservoir decline; mitigation includes well interventions, rigless activities and cost discipline, but volumes remain under structural pressure.
Regulatory approval delays	Critical approvals pending: Sijimali consent to operate, Bokaro Stage 2 forest clearance, new mining leases. Any delay would push back growth milestones and cost-saving benefits.
Commodity price cyclicality	Aluminium, zinc, copper and oil prices remain volatile. Aluminium is 28% hedged for the balance FY27 at $3,062/ton, but unhedged exposure remains significant.
VRL refinancing needs	VRL requires ~$1B in FY28 and ~$730M in FY29, relying on brand fee (0.75–3% until March 2029) and dividends. Any disruption to dividend flows or bond market access could strain servicing.
India Ratings upgrade pending	CRISIL/ICRA upgraded to AA+; India Ratings still AA- on watch. Management expects an upgrade within weeks; a delay may signal perception risk.

Q&A Highlights

Aluminium operating performance

Question: Why does VAML's reported EBITDA differ from the sum of Jharsuguda and BALCO slides, and what was the aluminium sales volume? (Akhilesh Kumar, MK Global)
Answer: The difference is a consolidation/intercompany elimination between BALCO and VAML. Aluminium sales for Q1 were 615 KT. (Anup Agarwal)

Alumina cost trajectory and hedging

Question: How should we model alumina production ramp-up and bought-out alumina costs, and what are the hedge details? (Indrajit Agrawal, CLSA)
Answer: Alumina production is H2-heavy; full-year target is 4–4.1 MT. Captive alumina mix was 70–72% in Q1; Q2 bought-out alumina cost trending to ~$750/ton. Q1 hedge: 293 KT at $2,813/ton; Q2 hedge: 270 KT at $2,830/ton; balance-year hedge: 28% at $3,062/ton. (Anup Agarwal)

Group capital allocation and dividends

Question: Is VRL deleveraging largely behind, and how should we model dividends across the five entities? (Sumangal Nevatia, Kotak Securities)
Answer: VRL debt has come from $10B to $5B and is targeted to $3B in two years. Vedanta India leverage should decline from 0.9x to 0.7x by March 2026. FY27 consolidated EBITDA outlook is $9.5–10B, generating ~$5B free cash flow, which funds both growth capex (₹20,000 crores) and deleveraging (₹20,000 crores). Dividend policy post-demerger is descriptive — boards have flexibility; model 4–5% yield on each company's market cap. With Vedanta Aluminium at ~$18B of the ~$35B group market cap, roughly half of total dividends should come from VAML going forward. (Ajay Goel, Arun Misra)

Aluminium cost outlook

Question: What drove the sequential decline in hot metal cost despite inflation, and what is the forward trajectory? (Amit Murarka, Axis Capital)
Answer: Cost declined due to higher captive alumina consumption and lower coal price; Middle East disruption costs are being absorbed. FY27 guidance remains $1,650–$1,700/ton; Q2 to be marginally higher due to monsoon power plant shutdowns. (Rajesh Kumar)

Long-term cost savings roadmap

Question: Can you quantify future cost-saving initiatives? (Jasandeep Singh, Nomura)
Answer: In 3–4 quarters, expect $175–$200/ton reduction from the current $1,698/ton. ~70% will come from alumina/bauxite (Lanjigarh ramp-up, Sijimali, Ghogharpalli) and the balance from coal. (Anup Agarwal)

Sijimali bauxite mine approvals and ramp-up

Question: What approvals remain for Sijimali and how quickly can mining scale? (Pinakin, HSBC)
Answer: Stage 2 forest clearance is received; only consent to operate remains and is expected this quarter. Mining will start after monsoon — FY27 output of 1–2 MT, FY28 of 6–7 MT. MDO partner is already appointed and groundwork is ready. (Rajesh Kumar)

BALCO ramp-up and 3 MTPA expansion

Question: Where does BALCO stand on potline ramp-up, and will BALCO participate in the 3 MTPA aluminium expansion? (Ashish Kejriwal, Nuvama)
Answer: BALCO produced 24 KT in Q1 vs 22 KT plan; the remaining 25% capacity is being commissioned with full production by the end of the current quarter. FY27 volume ~260–270 KT, plus ~190 KT in FY28. BALCO can participate in the 3 MTPA project; all options, including dividends and participation, are on the table. (Rajesh Kumar, Anup Agarwal)

VRL near-term cash flows

Question: What is VRL's expected cash outgo this year and next? (Raashi, Citi)
Answer: Remainder of FY27 needs ~$400M ($300M interest + $100M KCM funding), funded mostly by dividends (VAML interim dividend contributes ~$175M). FY28 needs ~$1B ($330M loan repayment, $350M interest, $350M KCM); FY29 ~$730M. The brand fee (0.75–3% until March 2029) plus 3–4% dividend yields make VRL self-managing. (Ajay Goel)

Sakti plant revival and PPA strategy

Question: What regulatory approvals are needed for Sakti Unit 1 restart, and what is the PPA pipeline? (Abhishek Poddar, Citadel)
Answer: No major hurdles — contractors are on site and ~26% of revival is complete. Boiler inspector certification is required before restart. Unit 1 restart by end Q2 FY27; Unit 2 by Q4 FY27. PPA wins include 500 MW with Tamil Nadu and a 1-year Kerala contract at ~₹5.96–5.97/kWh; the company is selective on rates given rising power demand. (Rajinder Ahuja)

India Ratings upgrade timeline

Question: Has management received any feedback from India Ratings on conditions for upgrade? (Shubham Jain, Nippon India Mutual Fund)
Answer: Ratings reflect hard numbers and perception; CRISIL/ICRA have already upgraded. India Ratings is expected to approach its rating committee within weeks, not months. (Ajay Goel)

Intercompany loans and RPTs

Question: Will there be intercompany loans or cash sweeps among the five listed entities? (Indrajit Agrawal, CLSA)
Answer: No intercorporate loans/deposits are planned; only routine related-party transactions with full governance compliance. There are no forced cash flows from Indian entities to Vedanta Resources. (Ajay Goel)

Key Takeaway

Vedanta Limited delivered a strong Q1 FY27, its first post-demerger quarter, with continuing-operations revenue up 51% YoY to ₹23,456 crores and all-time-high EBITDA of ₹8,469 crores (57% margin, up 985 bps YoY), anchored by record performances at Vedanta Aluminium (EBITDA ₹10,499 crores, up 134% YoY) and Zinc India's lowest-ever $851/ton cost. The balance sheet strengthened materially — Vedanta Ltd net debt/EBITDA at 0.3x with cash of ₹19,922 crores, while VRL refinanced ~$2.25 billion at lower rates and reduced debt by ~$1.1 billion in Q1. Management guided to FY27 consolidated EBITDA of $9.5–10 billion, enabling ₹20,000 crores of growth capex and continued deleveraging. Key near-term catalysts include Gamsberg Phase 2 commissioning, BALCO full ramp-up, Sijimali and Kuraloi mine start-ups, and Sakti Unit 1 restart; watch risks include Middle East geopolitical disruptions, Sakti execution slippage, and pending regulatory approvals.