Vedanta Limited Q4FY21 - Earning Analysis | Globe Capital
17-Nov-2021
Vedanta Limited Q4FY21 – Earning Analysis

At the CMP of Rs. 282, the stock is trading at full year P/E multiple of 8.9 times with the full year EPS of Rs 31.80 per share.

Q4 FY21 Overview and Verdict
CMP
Rs. 282
Verdict
Higher than estimates

At the CMP of Rs. 282, the stock is trading at full year P/E multiple of 8.9 times with the full year EPS of Rs 31.80 per share.

The Company reported a consolidated net profit of Rs 6,432 crore as against a net loss of Rs 12,521 crore, mainly driven by an increase in zinc and aluminium volumes along with record-high commodity price levels.

The company’s revenue for Q4 FY2021 was at Rs 27,874 crore, higher 24% QoQ and 43% YoY, primarily due to higher volumes in aluminium, zinc and iron ore businesses, higher power sales and improved commodity prices.

Earnings before interest, taxes, depreciation and amortization was recorded at Rs 9,107 crore, higher 18% QoQ and 88% YoY in Q4 of FY21 on the back of higher volumes in zinc, aluminium & iron ore business and higher commodity and oil prices in Q4 FY2021, partially offset by higher cost of production at aluminium and steel business majorly due to input commodity inflation.

Full Year Earnings:

EBITDA up by 30% Y-o-Y, at Rs. 27,341 crore

Robust EBITDA margin of 36%

Att. PAT (before exceptional items) at Rs. 12,151 crore

Improved double-digit ROCE at 19%

Net Debt/EBITDA at 0.9x, maintained at low level

Net Debt at Rs. 24,414 crore, reduction of 32% compared to 31st December 2020.

Strong liquidity position with total cash & cash equivalent at Rs. 32,614 crore.

Management Takeaways:

Its key businesses delivered record operational performance, maintaining the trajectory of cost and volumes, driven by structural integration and technology adoption.

The company has planned a capex of almost $2 billion (Rs 14,700 crore) for FY22.

It has been able to conserve capex to a large amount. Last year, the capex was around $0.8-$0.9 billion in FY21. In the current year, we are thinking to spend somewhere between $1.5 -$2 billion both on project capex and sustaining together.

The sustaining capex for FY22 will be around $0.9 billion (Rs 6,600 crore) and growth of around $1.1 billion (Rs 8,100 crore). This is probably the highest capex in the last 5 years.

The company is planning to take increase the capacity of steel business in Karnataka from 1.5 million tonne to 3 million tonne in the next 15-18 months.

The new gas processing terminal commissioned; ramp up underway expected to add ~ 15 kboepd by Q1 FY2022.

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