Summary
Vedanta Limited - Q3 FY 2025-26 Earnings Call Summary Thursday, January 29, 2026 5:30 PM
Event Participants
Executives 8 Ajay Goel, Anup Agarwal, Arun Misra, Charanjit Singh, Deshnee Naidoo, Jasmin Sahurity, Rajinder Singh Ahuja, Rajiv Kumar
Analysts 5 Amit Lahoti, Ashish Kejriwal, Dhananjai Bagrodia, Pallav Agarwal, Rashi Chopra, Ritesh Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹45,899 crores | +19% YoY; Highest ever quarterly revenue driven by favorable pricing and strong operational execution. |
| EBITDA | ₹15,171 crores | +34% YoY; Record quarterly EBITDA with margins expanding 629 bps to 41%. |
| Net Profit (PAT) | ₹7,807 crores | +60% YoY; Lifetime high quarterly profit on back of cost optimization and volume expansion. |
| Net Debt | ₹60,624 crores | -4.5% QoQ; Significant deleveraging from improved cash flows and strategic stake sales. |
| Net Debt/EBITDA | 1.23x | Improved from 1.4x in prior periods; Management targets 1.0x by end of FY26. |
| Aluminum Cost | $1,674/MT | Lowest in 17 quarters; Reflects $110/MT QoQ decline in power costs. |
| Zinc (HZL) Cost | $940/MT | 5-year low production cost; 6% better than annual guidance. |
| Growth CAPEX | $1.3 billion | Invested over 9 months; On track to meet full-year guidance of $1.7 billion. |
Geographic & Segment Commentary
- Aluminum Business: Achieved highest ever quarterly alumina production (0.8 MT, +57% YoY) following the commissioning of Lanjigarh Train 2. New 435 KT BALCO smelter has commenced production with 20 pots online, targeting 2.8 MTPA total group capacity post-ramp-up.
- Zinc India (HZL): Recorded record mined and refined metal output (+4% YoY). Commissioned 160 KT Debari roaster and added 21 KT capacity via debottlenecking at Chanderia/Dariba smelters.
- Oil & Gas: Average production at 85,000 boepd. Base decline rate improved from 18% to 13%; Gas discovery at Ambe field and nearing final stages of ASP implementation at Mangala field to unlock 50 million barrels.
- Power Business: Added 1.3 GW capacity at Meenakshi and Athena; total operating capacity at 4.2 GW. Athena signed supply contracts for its first 600 MW unit.
Company-Specific & Strategic Commentary
- Corporate Demerger (Vedanta 2.0): NCLT approved the demerger scheme on Dec 16; management targeting April 1, 2026, as the effective date with listings in Q1 FY27.
- De-leveraging Strategy: Launched Zinc India OFS (1.1% stake) to raise ~₹3,000 crores for debt reduction; targeting ₹0.8-$1 billion group-level deleveraging in FY26.
- Vertical Integration: Lanjigarh refinery expansion to 5 MTPA and upcoming Sijimali bauxite mine (FC1 received) aim to achieve 80% captive alumina integration by Q1 FY27.
- ESG Leadership: Secured 2nd rank globally in S&P Sustainability Assessment (Aluminum); Oil & Gas business ranked in top 5 globally in debut assessment.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Annual EBITDA | >$6 billion (FY26) | Record performance expected due to commissioned projects and volume ramps. |
| Aluminum Cost | $50-$60/MT reduction | Expected in Q1 FY27 driven by Sijimali bauxite and Lanjigarh ramp-up. |
| Aluminum Capacity | 3.0 MTPA (18 months) | Driven by BALCO expansion (435 KT) and debottlenecking at Jharsuguda. |
| Power Capacity | 4.8 GW (H1 FY27) | Progressing toward 5 GW near-term target with 10-12 GW long-term vision. |
| Oil & Gas Production | 90,000 boepd (FY27) | Stabilization of base decline and contributions from ASP/Tight Oil projects. |
Risks & Constraints
| Risk | Context |
|---|---|
| Project Delays | Oil & Gas volumes missed internal targets due to ASP commissioning delays and Northeast exploration hurdles. |
| Aluminum Cost Volatility | While captive alumina is increasing, current purchased alumina remains sensitive to LME lags (45-60 days) and carbon commodity inflation. |
| Regulatory Approvals | Steel expansion (1.5 to 3 MTPA) remains pending MoEFCC final clearances; Sijimali bauxite requires EC and CTO for monsoon operations. |
Q&A Highlights
Aluminum Cost & Alumina Sourcing
- Question: What is the mix of captive vs. imported alumina and the impact of LME-linked pricing? (Amit Lahoti)
- Answer: Captive mix was 60% in Q3, targeting 70% in Q4 and 80% by Q1 FY27. Current alumina cost is elevated due to a 60-day lag in LME-linked pricing during a rising market; FY27 contracts will be mostly API-linked to mitigate LME volatility (Anup Agarwal).
Demerger & Debt Allocation
- Question: How will the ₹60,624 crore net debt be apportioned across demerged entities? (Pallav Agarwal)
- Answer: Debt allocation is aligned with asset ratios and servicing capabilities. Aluminum and Power will carry significant portions, while Oil & Gas and Iron & Steel are intended to be nearly debt-free post-demerger (Ajay Goel).
Hedging Strategy
- Question: What are the hedging volumes and prices for FY27? (Sumangal Nevatia)
- Answer: Aluminum is 18% hedged at $2,625/MT; Zinc is 9% hedged at $3,072/MT; Silver is 7% hedged at $55/oz (Ajay Goel).
Resource Development
- Question: What is the timeline for Sijimali bauxite and Kuraloi coal? (Ashish Kejriwal)
- Answer: Kuraloi coal mine is expected to commission in Q4 FY26. Sijimali bauxite is on track for operationalization by Q1 FY27 (monsoon), with EC expected by February 2026 (Rajiv Kumar).
Key Takeaway
Vedanta delivered a landmark Q3 FY26, achieving record quarterly EBITDA of ₹15,171 crores and its highest-ever PAT of ₹7,807 crores. Performance was underpinned by significant cost reductions in the Aluminum segment ($1,674/MT) and record production at Hindustan Zinc. Strategically, the company is at the cusp of its “Vedanta 2.0” transformation, with NCLT approval secured for a demerger effective April 1, 2026. Management is aggressively deleveraging, utilizing a ₹3,000 crore Zinc India OFS to target a 1.0x Net Debt/EBITDA ratio by year-end. Production capacity is expanding across verticals, notably with the BALCO smelter ramp-up and a target of 80% captive alumina integration by Q1 FY27. While Oil & Gas volumes saw slight delays, the commissioning of ASP projects and new mineral blocks (Sijimali/Kuraloi) provide strong visibility for the guided $6 billion+ annual EBITDA. The company remains focused on operationalizing growth projects to drive margin expansion through FY27.
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