Vedanta Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Record Q1 EBITDA despite price headwinds: Consolidated EBITDA of ₹10,746 crore (+5% YoY) was the highest-ever first quarter, driven by cost reduction, higher premia, and operational records across aluminium, zinc, and power.
• Cost performance is the standout: Aluminium hot metal cost (ex-alumina) hit a 16-quarter low of \$888/t, Zinc India delivered its lowest-ever Q1 CoP at \$1,010/t (-9% YoY), and Zinc International CoP fell 21% YoY, insulating margins from softer LME prices.
• Volume growth engines are firing: Record quarterly alumina production (+9% YoY), Gamsberg zinc production surging 74% YoY, and power sales jumping 33% QoQ signal that the operational ramp-up is delivering ahead of major new capacity starts in Q2.
• The balance sheet is strengthening, not just growing: Net Debt/EBITDA improved to 1.3x, cost of debt fell ~130 bps YoY to 9.2%, and credit ratings were reaffirmed at AA, supported by the ₹3,028 crore HZL stake sale and ₹5,000 crore NCD issuance.
• What to watch next quarter: Commissioning of the 435 kt Balco smelter, Lanjigarh Train II, and 1,300 MW of new thermal power capacity, all targeted for Q2, plus the start of West Coast drilling and ASP injection in Oil & Gas.

Operational Momentum

• Aluminium: Record alumina production of 587 kt (+9% YoY, +36% QoQ) keeps the 3 MMT FY26 target on track. Cast metal production was flat, but the hot metal cost (ex-alumina) fell to a 16-quarter low of \$888/t, and the overall CoP dropped 12% QoQ, cushioning the impact of a 3% YoY decline in LME prices.
• Zinc India: Highest-ever Q1 mined metal production at 265 kt (+1% YoY), with the lowest Q1 CoP of \$1,010/t (-9% YoY). Refined metal output fell 5% YoY on planned maintenance, while record quarterly zinc alloy production pushed the value-added product share to ~24%.
• Zinc International: Gamsberg production jumped 74% YoY and 13% QoQ to 57 kt, driven by mining ramp-up and improved ore availability, with a record monthly zinc recovery of 86.4% in June. CoP fell 21% YoY to \$1,269/t, helping EBITDA more than double YoY to ₹422 crore.
• Oil & Gas: Production fell 17% YoY to 93.2 kboepd on natural decline in Rajasthan and Ravva, partially offset by Cambay growth (+42% YoY). Despite the volume drop, EBITDA rose 17% YoY to ₹1,268 crore, supported by higher gas realizations (+28% YoY) and an 11% QoQ opex reduction from optimized polymer injection.
• Power: EBITDA surged 63% YoY to ₹460 crore as total sales rose 33% QoQ, realizations improved 56% YoY to ₹4.37/kWh, and Jharsuguda costs fell 5% YoY. The Meenakshi plant (650 MW now operational) contributed 331 mu of sales at ₹7.20/kWh.
• Ferrochrome: FACOR swung from a ₹2 crore loss in Q4 to a ₹46 crore EBITDA profit in Q1, with production up 155% QoQ to 28 kt on the restart of a second furnace and margin improving from \$25/MT to \$200/MT.

Agarwal: "Our 1Q performance has set a strong foundation for the year ahead. Amidst global market volatility, we delivered the highest-ever first quarter EBITDA. Operationally, we achieved the lowest hot metal cost (ex-Alumina) in the last 16 quarters, lowest-ever 1Q Zinc India CoP, 74% YoY increase in Gamsberg's production, 33% QoQ surge in power sales, and 150% QoQ jump in Ferro Chrome volumes."

Cost & Margin Delivery

• Consolidated margin expansion: EBITDA margin expanded 81 bps YoY to 35%, the highest in 13 quarters, as cost reduction and higher premia more than offset lower output commodity prices and volumes.
• Aluminium cost leadership: The hot metal cost (ex-alumina) of \$888/t is the lowest in 16 quarters, and the overall CoP fell 12% QoQ, enabling flat YoY segment EBITDA of ₹4,462 crore despite a 3% decline in LME aluminium prices.
• Zinc cost trajectory: Zinc India's Q1 CoP of \$1,010/t (-9% YoY, excluding royalty) is the lowest-ever first quarter, while Zinc International's CoP fell 21% YoY to \$1,269/t on strong operational performance and lower treatment charges.
• Oil & Gas opex control: Opex fell 11% QoQ, driven by optimized polymer injection and chemicals, helping EBITDA rise 17% YoY to ₹1,268 crore even as production declined 17% YoY.
• Finance cost tailwind: Finance cost fell 9% YoY and 22% QoQ due to lower average borrowings, reduced interest rates, and one-offs, with the closing cost of debt down ~130 bps YoY to 9.2%.
• Steel margin compression: ESL's EBITDA margin fell to \$44/t from \$84/t YoY, reflecting lower realizations and higher input costs, a pocket of weakness in an otherwise strong cost story.

Growth Projects & the Q2 Inflection

• Aluminium capacity step-up: The 435 kt Balco smelter and Lanjigarh Train II refinery are both set for commissioning in Q2, which will lift alumina capacity toward the 3 MMT FY26 target and add metal volume.
• Power capacity doubling down: 1,300 MW of new thermal power capacity is targeted for Q2 commissioning: Meenakshi Unit 4 (350 MW) and Athena Unit 1 (600 MW, already commissioned in July and now selling commercially). Athena Unit 2 (600 MW) is expected in Q4.
• Raw material security: The Sijimali bauxite mine and Kuraloi coal mine are both slated to start operations in H2, which would structurally lower raw material costs and reduce third-party dependence.
• Gamsberg Phase 2: Overall project progress reached 75.2%, with completion targeted in 2HFY26, setting up the next leg of zinc volume growth beyond the current ramp-up.
• Oil & Gas activity pickup: West Coast drilling is set to commence from Q2, unconventional exploration well drilling is planned with an international rig in Q2, and ASP injection is targeted for Q2, all aimed at arresting the Rajasthan production decline.
• HZL expansion approved: The board approved a 250 Ktpa integrated metal expansion, moving toward the stated 2x growth ambition.

Balance Sheet & Capital Allocation

• Deleveraging progress: Net Debt/EBITDA improved to 1.3x, with Vedanta Resources deleveraging by \$227 million in Q1. The HZL stake sale generated ₹3,028 crore, and an interim dividend of ₹7/share was paid.
• Refinancing benefit: A ₹5,000 crore NCD issuance and other refinancing drove the cost of debt down ~130 bps YoY to 9.2%, with credit ratings reaffirmed at AA by both CRISIL and ICRA.
• Remaining FY26 debt service: \$320 million in loan repayments and interest will be managed from a mix of internal sources and refinancing, with the group targeting a net debt/EBITDA of ~1x for FY25 and 2x over the medium term.
• Investment income boost: Investment income rose 5% YoY on higher average investments and 6% QoQ on MTM gains and higher interest on income tax refunds.
• Tax rate normalization: The effective tax rate rose to 26% from 14% in Q1FY25, which included a one-time item of ₹662 crore; adjusted PAT grew 13% YoY to ~₹5,000 crore.

Goel: "This quarter, we achieved the highest-ever first quarter EBITDA of ₹10,746 crore, reflecting 5% YoY growth. The EBITDA margin expanded by 81bps to 35%, which is the highest in last 13 quarters. Our adjusted PAT grew 13% YoY to ~5,000 crores. This strong performance alongside corporate initiatives, such as the HZL stake sale which generated ₹3028 crore cash, has enabled Vedanta to deliver a Net Debt to EBITDA ratio of 1.3x."

Segment Drags & Vulnerabilities

• Oil & Gas volume decline: Gross operated production fell 17% YoY to 93.2 kboepd, with Rajasthan down 20% YoY and Ravva down 25% YoY. The FY26 guidance of 95-100 kboepd implies a recovery that hinges on infill wells, ASP injection, and new drilling delivering in H2.
• Steel margin pressure: ESL's EBITDA margin halved YoY from \$84/t to \$44/t on lower realizations and higher input costs, with saleable production also down 2% YoY on furnace maintenance.
• Copper still loss-making: Despite cathode production more than doubling to 44 kt, the copper segment remained EBITDA-negative at (₹26) crore, weighed down by negative TCRCs and low LME prices.
• Exploration write-off: Capitalized OALP exploration costs were expensed to the P&L due to the absence of anticipated future benefits from drilling activities in those blocks, a reminder of the binary nature of exploration spend.
• Commodity price exposure: Revenue fell 6% QoQ largely on softening output commodity prices and lower volumes, and while cost performance is strong, sustained margin expansion ultimately requires price support or further cost levers.

Guidance & Commitments

Key Metrics