Vedanta Ltd Q4 FY2022 Concall Summary

Key Takeaways

• Record quarter, record year: Consolidated revenue hit ₹39,342 crore (up 41% YoY) and EBITDA reached ₹13,768 crore (up 51% YoY), both all-time highs, driven by volume growth and supportive commodity prices.
• Capital returns in focus: The board declared a first interim dividend of ₹31.5 per share (₹11,710 crore total), consistent with the policy of returning robust free cash flow to shareholders while aiding group deleveraging.
• Balance sheet strengthened further: Gross debt fell by ₹3,919 crore YoY to ₹53,109 crore, net debt declined by ₹3,435 crore, and both CRISIL and India Ratings upgraded the company to 'AA' with a stable outlook.
• ESG transition gains commercial traction: A 580 MW renewable energy PPA was signed, green aluminium brands launched, and a \$5 billion net-zero pledge underpinned the quarter's non-financial milestones.
• What to watch next quarter: The pace of volume growth as commodity prices potentially moderate, progress on the Copper India restart, and any further capital allocation moves given the strong cash position of ₹32,130 crore.

Financial Performance

• Revenue: Record consolidated revenue of ₹39,342 crore, up 41% YoY and 17% QoQ, supported by higher sale volumes and improved commodity prices. FY22 revenue of ₹131,192 crore was also a record, up 51% YoY.
• EBITDA: Highest ever consolidated EBITDA of ₹13,768 crore, up 51% YoY and 26% QoQ, driven by higher sales volume, supportive commodity prices and operational efficiencies, despite input commodity inflation pushing up the cost of production. FY22 EBITDA of ₹45,319 crore grew 66% YoY with a robust margin of 39%.
• PAT: Q4 PAT (before exceptional items and one-time tax credit) stood at ₹7,570 crore, up 48% YoY. FY22 PAT on the same basis was ₹24,299 crore, up 95% YoY.
• Finance cost: Q4 finance cost rose only 1% YoY to ₹1,333 crore as one-time charges on a Vedanta Aluminium loan were broadly offset by lower average borrowings and decreased cost of borrowings. FY22 finance cost fell 8% YoY to ₹4,797 crore on lower average borrowings and cheaper funding.
• Exceptional items: Q4 saw a net exceptional loss of ₹336 crore, comprising a ₹2,697 crore impairment reversal gain in Oil & Gas, largely offset by ₹2,403 crore in exploration cost write-offs at Cairn.
• Leverage: Gross debt declined by ₹3,919 crore YoY to ₹53,109 crore, primarily from deleveraging at Balco and CIHL. Net debt fell by ₹3,435 crore YoY to ₹20,979 crore, driven by strong cash flow from operations after ₹11,043 crore in capex and ₹19,356 crore in dividend payouts. Cash and equivalents stood at a robust ₹32,130 crore.

Duggal: "I am delighted to share record operational and financial performance for FY22. We have delivered historical best EBITDA of ₹45,319 crore and PAT (before exceptional and one-time tax credit) of ₹24,299 crore. This reflects our relentless focus on volume growth and operational efficiency, underpinned by structural integration and technology adoption."

Operational Highlights by Segment

Capital Allocation & Balance Sheet

• Dividend: The board approved a first interim dividend of ₹31.5 per share (3,150% on face value of Re. 1) for FY23, amounting to approximately ₹11,710 crore. The record date is May 9, 2022. The payout is in line with robust profitability and cash flows and will also aid group-level deleveraging under the latest capital allocation policy.
• Credit rating upgrade: Both CRISIL and India Ratings upgraded the company's rating to 'AA' with a stable outlook, reflecting the strengthened balance sheet.
• Cash position: Cash and cash equivalents stood at a robust ₹32,130 crore as of March 31, 2022, providing ample liquidity for growth capex and shareholder returns.

ESG & Energy Transition

• Net Zero commitment: Vedanta is committed to reducing carbon emissions to zero by 2050 or sooner and has pledged \$5 billion over the next 10 years to accelerate the transition.
• Renewable energy milestone: A power distribution agreement for 580 MW of renewable energy was signed, a significant step toward the 2.5 GW Round the Clock renewable energy commitment.
• Green aluminium launch: The company launched green aluminium under the brands 'Restora' and 'Restora Ultra', creating a low-carbon product line.
• Operational decarbonisation: Initiatives include dispatching the first fly ash rake from Jharsuguda to ACC-Holcim, commencing ash backfilling in a Coal India open cast mine, using 17kt of biomass at Hindustan Zinc, and committing to 5% biomass use in thermal power plants.
• Water positivity: A collaboration with TUV-SUD was initiated to develop a roadmap for the 'Net Water Positive' initiative.
• Social pledge: Under the Anil Agarwal Foundation, the group has pledged ₹5,000 crore over the next five years on social impact programs focusing on nutrition, women and child development, healthcare, animal welfare, and grassroot sports. A MoU was signed with the Government of Rajasthan to develop 25,000 Nand Ghars.

Duggal: "As a part of our ESG Journey, we have signed an agreement for 580 MW renewable power distribution which brings us one step closer towards becoming a Net Zero Carbon organization. As we leap forward, we are committed to make Vedanta stronger through growth, vertical integration, operational efficiencies and renewed ESG purpose."

Guidance & Commitments

Key Metrics