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Vedanta Ltd reported a 78% year-on-year rise in net profit to Rs 6,202 crore in Q2, driven by higher commodity prices and production growth, while revenue surged 57% to Rs 26,356 crore, reflecting strong operational performance.

Vedanta Q2 Profit Surges 78% to Rs 6,202 Crore, Revenue Jumps 57%

Vedanta's Q2 results highlight a sharp rebound in profitability, with net profit jumping 78% to Rs 6,202 crore and revenue rising 57% to Rs 26,356 crore. EBITDA more than doubled to Rs 9,938 crore, up 106% YoY, as margins improved to 60%. The Zinc India segment led growth, with revenue surging 76% to Rs 14,525 crore, while mined metal production hit 2,71,000 tonnes, up 5% YoY. Free cash flow before capital expenditure reached Rs 5,803 crore, supporting reinvestment plans.

Net debt fell by Rs 4,624 crore to Rs 3,675 crore, improving debt-to-EBITDA ratios. Zinc production costs dropped 29% YoY to $703 per tonne, aided by a 35% rise in average zinc prices and a 59% surge in silver prices. However, supply-chain disruptions linked to the Strait of Hormuz closure reduced international copper sales by 74%, impacting revenue diversification.

The Gamsberg project expansion in South Africa adds 200,000 tonnes of annual metal-in-concentrate capacity, enhancing long-term production. Vedanta’s improved EBITDA margins provide flexibility for growth projects funded by Rs 1,135 crore in Q2. Yet, reliance on volatile commodity prices and supply-chain risks remain key challenges.

Investors benefit from the profit surge, which may boost stock valuations, while creditors gain from reduced net debt. The Indian government could see higher tax contributions and economic activity. However, sustaining gains amid price volatility and supply-chain uncertainties remains a critical test.

Vedanta plans to commission the second phase of its Gamsberg project in South Africa, expanding production capacity. The company will continue investing in growth projects using its Rs 5,803 crore free cash flow.

Vedanta’s Q2 results show robust profitability and debt reduction, driven by commodity price gains and production growth. The key uncertainty lies in sustaining these gains amid supply-chain volatility and commodity price fluctuations.

Topics: Mining Sector, Financial Results, Commodity Prices, EBITDA Growth, Supply Chain Risks, Free Cash Flow, Zinc Production, Net Debt, Vedanta, India

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Source: ET Markets