Metrics cut 2
- Vedanta India consolidated leverage target cut to 0.7x by March 2027 (from current 0.9x)
- VRL debt target cut to $3 billion over 2 years (from $5 billion)
Event Participants
Executives (13)
Ajay Goel, Anup Agarwal, Arpit Mundra, Arun Misra, Charanjit Singh, Jim Gast, Navin Jaju, Pankaj Jha, Pankaj Sharma, Rajender Singh Ahuja, Rajesh Kumar
Analysts (8)
Abhishek Poddar, Akhilesh Kumar, Amit Murarka, Ashish Kejriwal, Indrajit Agarwal, Jashandeep Singh, Ritesh Shah, Sabri Hazarika, Shubham Jain, Sumangal Nevatia
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Oil & Gas Revenue | ₹2,507 crores | Down 3% QoQ due to lower volumes from natural decline, offset partially by 50% higher Brent prices QoQ |
| Oil & Gas EBITDA | ₹1,232 crores | Up 16% QoQ; EBITDA margin 49%; YoY flat |
| Oil & Gas PAT (cont. ops) | ₹194 crores | Before exceptional items; exceptional loss of ₹345 crores net of tax for impairment |
| Oil & Gas Unit Operating Cost | $17.4/barrel | Down 3% QoQ driven by efficiencies in workover and well intervention programs |
| Power Revenue | ₹2,607 crores | Up 31% YoY on sales of 5,224 million units, up 38% YoY |
| Power EBITDA | ₹291 crores | Impacted by Shakti boiler incident; Meenakshi Energy delivered highest ever quarterly EBITDA of ₹112 crores |
| Power PAT (adj.) | -₹59 crores | Negative after neutralizing one-time exceptional item of ₹487 crores |
| Iron & Steel Revenue | ₹3,662 crores | Up 18% YoY; EBITDA ₹515 crores up 54% YoY; margin expanded from 11% to 14% |
| Iron & Steel Net Debt | ₹2,733 crores | Net debt-to-EBITDA at 1.3x; ROCE 16% |
| Aluminium Revenue | ₹21,105 crores | All-time high; up 45% YoY and 13% QoQ |
| Aluminium EBITDA | ₹10,499 crores | Up 134% YoY, up 24% QoQ; EBITDA per ton expanded from $1,511 to $1,804 |
| Aluminium Hot Metal Cost | $1,698/ton | Down 4% YoY, down 3% QoQ; within guidance range |
| Aluminium PAT | ₹6,597 crores | Up over 200% YoY |
| Aluminium Net Debt-to-EBITDA | 0.9x | Improved from 1.3x; cost of borrowing ~9% |
| Vedanta Ltd Revenue | ₹23,456 crores | Up 51% YoY (continuing operations) |
| Vedanta Ltd EBITDA | ₹8,469 crores | Nearly doubled, up 98% YoY; margin 57%, up 985 bps YoY |
| Vedanta Ltd PAT | ₹5,294 crores | Up from ₹32 crores YoY |
| Vedanta Ltd Net Debt-to-EBITDA | 0.3x | Amongst best in industry; cash and cash equivalents ₹19,922 crores |
| Vedanta Ltd ROCE | 28% | For Q1 FY27 |
| Zinc India Refined Metal Production | 260,000 tonnes | Up 4% YoY; lowest ever cost of production at $851/tonne |
| Aluminium Production | 632kt | All-time high; up 5% YoY and 3% QoQ |
| Alumina Production | 826kt | Up 41% YoY; down 6% QoQ due to power plant stabilization issues |
| Value Added Product (Aluminium) | 389,000 tonnes | Record; up 14% YoY; billet production +18%, alloy production +38% QoQ |
| Power Sales Volume | 5,224 million units | Up 38% YoY |
| Iron Ore Production | 2.6 million tons | Up 4% YoY; EBITDA margin up 24% YoY |
| Copper India Sales | 53,000 tonnes | Up 3% YoY; highest first quarter sales in 8 years |
Geographic & Segment Commentary
Vedanta Oil & Gas: Gross operated production averaged 77.71 thousand barrels of oil equivalent per day (63.1k from Rajasthan, 11.6k offshore, 3.1k OLP). Working interest production in Rajasthan was 51.1k barrels/day. Production supported by well productivity improvements and targeted interventions. Focus on decline management, accelerating well interventions, and maintaining operational cost discipline, with FY27 costs expected aligned with FY26 levels.
Vedanta Power: Became listed entity effective May 1, 2026. India's fifth largest private thermal company with 4.2 GW operating assets, targeting 4.8 GW by FY27 end and ~7.2 GW additional from FY30. 74% of volumes secured through medium/long-term PPAs; 85% of coal backed by long-term linkages. Shakti unit 1 restoration on track for end Q2 FY27; unit 2 completion targeted by Q4 FY27, with insurance claims notified.
Vedanta Iron & Steel: Fully integrated model across mining (Odisha, Goa, Karnataka, Liberia) and downstream steel (Goa, Bokaro). Steel sellable production at 58,280 with 12% EBITDA margin. Iron ore production up 4% YoY to 2.6 million tons. Expansion projects progressing—Gokaro stage one forest clearance received, project on track for FY27 end; ductile iron pipe project in Goa expected later this year.
Vedanta Aluminium: Record quarter with all-time high production. Alumina production impacted by power plant stabilization issues. Renewable energy supply from Serentica increased 60% QoQ to 198 MW, targeting 371+ MW by FY27 end. Kurloi coal mine received mining lease and opening permissions, planned to start this quarter. Achieved 99%+ ash utilization.
Vedanta Limited: First reporting period post-demerger as India's most diversified base metals company. Zinc India delivered lowest ever production cost; silver contributed 46% of Zinc India EBITDA. Zinc International Hamburg Phase 2 to add 200,000 tons capacity (total 450,000 tpa). Copper International impacted by Middle East supply chain disruptions.
Company-Specific & Strategic Commentary
Demerger & Value Unlocking: Combined market cap of resulting companies grew over ₹71,000 crores in Q1 FY27. Demerger effective May 1, 2026, providing strategic focus and unlocking shareholder value across five entities.
Vedanta Resources Deleveraging: Debt reduced from $10 billion to $5 billion over 3 years; targeted to reach $3 billion in 2 years. Raised $1.7 billion international bonds at 7.4% coupon (8.5-year average maturity) and $2.25 billion syndicated term loan at 6.4% (3-year maturity). Refinancing program targets ~280 bps reduction in funding costs, saving >₹1,000 crores annually.
Real Estate Value Unlocking: Plan to demerge non-core real estate assets (2,000+ acres at Vedanta Limited alone) into a pure-play company; estimated potential value of ₹30,000 crores (aspirational). Timeline of ~1 year.
Aluminium Backward Integration: Captive bauxite from Sugjimali mine (1-2 million tons expected this year, 6-7 million tons next year) expected to reduce alumina costs by $40-50/ton. Captive alumina consumption targeted at 90% vs current 70-72%.
Power PPAs & Growth: Tied up 600 MW of 1,600 MW commissioned capacity at Meenakshi (700 MW) and Athena (600 MW); Tamil Nadu 500 MW for 5 years, Kerala 1-year contract at ₹5.96-5.97/kWh. Strategic approach to signing PPAs at respectable rates given rising power demand.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Aluminium Hot Metal Cost | $1,650-1,700/ton for FY27 | Q2 may be marginally higher due to planned monsoon power plant shutdowns; expected cost reduction of $175-200/ton in 3-4 quarters |
| Alumina Production | 4-4.1 million tons from Lanjigarh FY27 | H2-heavy trajectory; 70-72% captive mix currently, targeting 90% |
| Aluminium Sales Volume | Q2 hedged 270kt at $2,830/ton | Balance year hedged 28% at average $3,062/ton |
| BALCO Ramp-up | ~260-270kt this year, ~435kt total from expansion | Full capacity expected exiting Q4 FY27; additional 190kt next year |
| Vedanta Power Capacity | 4.8 GW by FY27 end; +7.2 GW from FY30 | 74% volumes secured via medium/long-term PPAs |
| Shakti Unit 1 | Restoration by end Q2 FY27 | Contractor working; 26% revival completed; boiler inspection before restart |
| Shakti Unit 2 | Completion by Q4 FY27 | On track |
| Kurloi Coal Mine | 2 million tons FY27, 8 million tons FY28 | Received mining permissions; MDO partner appointed |
| Vedanta Ltd Capex | FY27: ~₹7,000 crores growth, ~₹4,000 crores maintenance | Zinc India ~70% of maintenance capex |
| Vedanta Aluminium Capex | FY27: ~₹5,000 crores (₹2,000-2,500 crores BALCO) | FY28: ~₹3,500-4,000 crores |
| VRL Cash Needs | ~$400 million FY27, ~$730-1,000 million FY28 | Funded via dividends (3-4% yield) and brand fees |
| VRL Debt Target | $5 billion → $3 billion over 2 years | Post-refinancing program reducing interest costs |
| Vedanta India Leverage | 0.7x by March 2027 (from 0.9x) | On consolidated basis |
Risks & Constraints
| Risk | Context |
|---|---|
| Middle East Geopolitical Tensions | Impacted Copper International sales down 51% YoY; inflationary pressures on aluminium costs. Mitigation: hedging 28% of volumes at $3,062/ton, cost guidance maintained. |
| Oil & Gas Natural Decline | Production declining 4-5% QoQ due to natural reservoir decline. Mitigation: well interventions, infill drilling, cost reduction to $17.4/barrel. |
| Shakti Boiler Incident | Boiler incident caused operational disruption and ₹487 crores exceptional charge. Insurance claims notified. Unit 1 restoration expected end Q2 FY27; unit 2 by Q4 FY27. |
| Power Fuel Cost Volatility | Import coal prices increased over 60%; mitigated by substituting 65-70% with Indian coal, targeting 100% domestic coal at Meenakshi. |
| Bauxite Supply Dependence | Currently 46-50% alumina from domestic bauxite; OMC pricing subjudice. Mitigation: Sugjimali mine ramp-up (1-2 million tons this year, 6-7 million tons next year). |
| Monsoon Impact on Operations | Planned power plant shutdowns during monsoon; alumina production seasonality. Q2 costs expected marginally higher. |
| Regulatory Approvals | Approvals needed for Shakti restart (boiler inspector), Sugjimali mining (consent to operate), Gokaro expansion (stage 2 forest clearance). All on track for stated timelines. |
| Aluminium Price Volatility | Global prices buoyant but cyclical. Hedged 28% of volumes at $3,062/ton for balance year; Q2 hedged 270kt at $2,830/ton. |
Q&A Highlights
Aluminium Financials & Hedging
- Question: Difference between sum of segment EBITDA (₹10,527 crores) vs reported (₹10,499 crores)? (Akhilesh Kumar, Emkay)
- Answer: Small consolidation adjustment eliminating inter-company transactions between BALCO and VAML. (Management)
- Question: Aluminium sales volume? (Akhilesh Kumar)
- Answer: Sales at 615kt for the quarter. (Management)
- Question: Hedging for balance year? (Indrajit Agarwal, CLSA)
- Answer: Hedged 28% at average $3,062/ton; Q2 specifically hedged 270kt at $2,830/ton. (Management)
Alumina & Bauxite Cost Trajectory
- Question: How to achieve 4.1 million tons alumina given current run rate? (Indrajit Agarwal)
- Answer: H2-heavy trajectory typical; monsoon months difficult. Still confident in 4-4.1 million tons guidance from Lanjigarh. (Management)
- Question: Purchased alumina cost delta and future trajectory? (Indrajit Agarwal)
- Answer: Alumina cost down 3% QoQ to $780/ton; on track to $750/ton in Q2 with higher captive mix (70-72%) and lower Alumina Price Index. Further reductions toward $700 dependent on Lanjigarh ramp-up and captive bauxite. (Management)
- Question: Cost benefit from captive bauxite (Sugjimali)? (Sumangal Nevatia, Kotak)
- Answer: $40-50/ton reduction at alumina level once Sugjimali ramps up; 1-2 million tons this year, 6-7 million tons next year. Difference between captive and bought-out alumina currently $50-60/ton. (Management)
Capital Allocation & Dividends
- Question: Is VRL deleveraging largely behind us? Dividend expectations? (Sumangal Nevatia)
- Answer: Deleveraging accomplished to large extent—$10 billion to $5 billion over 3 years, targeted to $3 billion. Vedanta India EBITDA outlook ₹9.5-10 billion with ~50% cash conversion (₹45-50,000 crores free cash flow). Capex ~₹20,000 crores across five entities, deleveraging at VRL ₹2-2.5 billion, while rewarding shareholders. Growth and deleveraging can coexist. (Ajay Goel)
- Question: Comfortable debt levels at VAML? (Sumangal Nevatia)
- Answer: Net debt at ₹29,500 crores; leftover capex on announced growth ~₹78,000 crores including BALCO (18-24 months). New 3 MTPA expansion still on drawing board; details in ~1 quarter. FY27 capex ~₹5,000 crores plus ₹2,000 crores maintenance. (Management)
Vedanta Resources Refinancing & Cash Needs
- Question: VRL outgo for FY27 and FY28? (Rahul, Nomura)
- Answer: FY27 remainder ~$400 million (interest $300 million + KCM $100 million), funded via dividends. FY28 ~$1 billion (loan repayment $330 million, interest $350 million, KCM $350 million); FY29 ~$730 million. Brand fee (3% for most businesses, 0.75% for power/copper) fixed until March 2029. (Ajay Goel)
Power Business - Shakti Revival & PPAs
- Question: Regulatory approvals for Shakti restart? (Abhishek Poddar, Citadel)
- Answer: Work already started; 26% revival complete. No regulatory hurdles—boiler inspector approval at final stage. Unit 1 restart expected end September/early October. Unit 2 on track for completion by end of this year. (Rajender Singh Ahuja)
- Question: PPA strategy for remaining capacity? (Abhishek Poddar)
- Answer: Tied up 600 MW total (Tamil Nadu 500 MW for 5 years, Kerala 1 year at ₹5.96-5.97/kWh). Market rates up ~₹1/kWh vs last year. Strategic approach—not rushing to sign PPAs, waiting for respectable rates given strong demand growth. (Rajender Singh Ahuja)
Vedanta Limited Ratings
- Question: Status of India Ratings upgrade? (Shubham Jain, Nippon India MF)
- Answer: ICRA and Crisil already upgraded to AA+; India Ratings maintaining AA- with watch. It's a function of numbers and perception—both favorable. Expect upgrade within weeks, not months. (Ajay Goel)
Coal Mine Ramp-up
- Question: Kurloi and Ghogarbali production expectations? (Analyst, HSBC)
- Answer: Kurloi FY27 target 2 million tons, FY28 8 million tons. Ghogarbali still under evaluation. (Management)
BALCO Growth Participation
- Question: BALCO ramp-up status and cash utilization? (Ashish Kejriwal, Nuvama)
- Answer: BALCO produced 24kt from new pot line in Q1 vs 22kt plan; ~260-270kt this year, full capacity exiting this quarter. BALCO can participate in 3 MTPA expansion—all options on table. (Management, Anup Agarwal)
Aluminium Cost Outlook
- Question: Long-term cost reduction measures? (Jashandeep Singh, Nomura)
- Answer: Expect $175-200/ton reduction in 3-4 quarters. 70% from alumina+bauxite (Lanjigarh ramp-up to 90% captive mix, Sugjimali captive bauxite), 30% from coal (Ghogarbali). (Management)
Real Estate Monetization
- Question: Real estate value unlock ($30,000 crores)? (Ritesh Shah, Investec)
- Answer: Demerging non-core real estate into pure-play company; 2,000+ acres at Vedanta Limited alone. ₹30,000 crores aspirational; timeline ~1 year for demerger approval. (Management)
Vedanta India EBITDA Outlook
- Question: Consolidated EBITDA guidance? (Sumangal Nevatia)
- Answer: ~$9.5-10 billion at current run rate with current volumes, costs, and macro tailwinds on currency and pricing. (Ajay Goel)
Key Takeaway
Vedanta Group reported a landmark Q1 FY27 as its first post-demerger reporting period, with the five listed entities collectively delivering strong performance. Vedanta Aluminium led with record revenue of ₹21,105 crores (up 45% YoY), EBITDA of ₹10,499 crores (up 134% YoY), and PAT of ₹6,597 crores, driven by all-time high production of 632kt, favorable aluminium prices, and continued cost optimization to $1,698/ton. Vedanta Limited's continuing operations nearly doubled EBITDA to ₹8,469 crores with 57% margins, while Zinc India achieved lowest-ever production costs at $851/ton on record volumes. Oil & Gas delivered steady EBITDA of ₹1,232 crores at 49% margins despite natural production decline, with cost discipline at $17.4/barrel. Power and Iron & Steel showed resilience with revenue growth of 31% and 18% YoY respectively, though Power faced a ₹487 crore exceptional charge from the Shakti boiler incident. Group deleveraging continued with VRL rated double-B (decade-high) and Vedanta Limited leveraging at 0.3x with ₹19,922 crores cash. Strategic priorities include aluminium backward integration (Sugjimali bauxite, Kurloi coal), BALCO ramp-up to ~435kt, power capacity expansion to 4.8 GW (7.2 GW additional from FY30), and real estate value unlocking. Management guided to consolidated Vedanta India EBITDA of $9.5-10 billion, 4-5% dividend yield across entities, and continued cost reduction of $175-200/ton in aluminium over 3-4 quarters, positioning the group to deliver sustainable growth while maintaining strong balance sheets and shareholder returns.