Mining major Vedanta is likely to report a decline in its profit after tax (PAT) for the October to December quarter of 2022. Analysts say that the company’s net profit may fall by up to three fourth on a year-on-year (YoY) basis, following the softening of the commodity cycle.
They said that the PAT may stay flattish on a quarter-on-quarter basis and the company’s EBITDA may dive 40 percent lower due to lower realisation in the major segments like copper, aluminium, zinc and crude.
Vedanta is an Indian multinational mining conglomerate, with a presence across India, South Africa, Namibia, Ireland, Liberia & UAE. It is engaged in the exploration, extraction and processing of minerals and oil & gas. The company’s other businesses include commercial power generation, steel manufacturing & port operations in India and manufacturing of glass substrates in South Korea and Taiwan.
Centrum Broking expects Vedanta’s revenue at ₹ 32,166.90 crores, down 5.7 percent year on year (YoY). It sees its EBITDA (at ₹ 6329.30 crores, down 41.1 percent YoY, further, it expects that the company might report an adjusted net profit at ₹ 1205 crores, down 71 percent from ₹ 4,201 crores in the December quarter.
The brokerage added that Vedanta’s zinc, copper and aluminium realisation may drop between 12 and 21 percent sequentially, while its power and steel production is likely to rise 10 percent and 78.9 percent.
Meanwhile, Phillip Capital expects no major surprise in the company’s Q3 earnings. It sees Vedanta reporting revenue of ₹ 34,371.5 crores, dropping 6.2 percent quarter on quarter and flat YoY. It sees the company’s EBITDA at ₹ 6,393.80 crore, down 40.5 per cent YoY. Adjusted profit after tax (PAT) is seen at ₹ 1,085.8 crores, down 31 percent sequentially.
It added that Vedanta’s aluminium, crude and zinc realisations fell 2-9 percent sequentially, translating to subdued operating performance. The company’s production failed to ramp up even as rationalisation of the cost of products helped operating performance.
The Anil Agarwal-led company has a market capitalization of ₹ 1,17,426 crore and is a large-cap company. It has a good return on equity of 29.46 percent, however, it has a slightly high debt-to-equity ratio of 1.09. Its shares are trading at a price-to-earnings ratio of 7.30, which is lower than the industry average of 11.26, indicating that the stock might be undervalued as compared to its peers. Vedanta has one of the highest dividend yields among Indian companies, at 25.74 percent.
Written by Simran Bafna
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