Last updated: 10 Nov, 2020 | 10:11 am
Vedanta Limited announced its Q2FY21 results, reporting a 62% decline in its net profit year-on-year for the quarter ended September 2020.
Profit: Vedanta witnessed a 62% decline in net profit to ₹ 824 crore on account of one-time tax expense. Tax was reported at ₹ 2,370 crore compared to ₹ 510 crore last quarter. The earning per share for the quarter was reported at ₹ 2.22 per share.
Revenue, EBITDA, and Margin: Vedanta reported revenues of ₹ 20,804 crore, up 33% quarter-on-quarter. EBITDA of ₹ 6,531 crore, an increase of 63% quarter-on-quarter and 45% year-on-year, attributable to higher commodity prices , higher volumes of zinc, iron ore and copper business and lower cost of production at Zinc and aluminium business. The revenue was lower by 4% year-on-year on account of lower volume at the Oil and gas business. EBITDA margin stood at 36%.
Depreciation, Finance Cost, and Investment Income: Depreciation grew 12% quarter-on-quarter to ₹ 1,938 crore mainly due to higher ore production at Zinc business. It was down 19% year-on-year mainly due to impairment of assets in the Oil and Gas business in Q4FY20.
Finance cost grew 5% quarter-on-quarter to ₹ 1,312 crore mainly due to higher average borrowing cost. The same was down 2% year-on-year because of reduction in gross borrowings.
Investment income declined 40% quarter-on-quarter and 27% year-on-year to ₹ 607 crore, attributable to MTM (mark to market) on investments.
Debt-to-equity ratio was down to 0.45 from 0.56 last quarter. This ratio measures the financing used to run operations, a lower ratio and a decreasing one as in this case, shows the company has more owned capital than borrowed, and this about the strengths of the company.
Debt service coverage ratio: This ratio measures the operating profit available to the company, to service its all debt payment related obligations. The ratio was at 1.26 for the quarter ending September 2020, up from 1.11 last quarter, showing an growing ability to pay debt related payments.
Interest Service Coverage Ratio: Unlike debt service, this ratio includes only the financing costs which are supposed to be covered by companies’ EBIT (Earnings before interest and tax). The ratio increased to 3.61 from 2.68 last quarter, implying solid interest repayment capability.
Vedanta Limited closed Tuesday’s trade at ₹ 99.75, up 5.30% this week from Friday's close. Vedanta has reported the highest quarterly operating result in more than 2 years. With a balance sheet focus aiming at creating value for stakeholders, Vedanta aims to contribute significantly towards building a self-reliant India and is committed to sustainable growth. However, with a failed delisting, which was supposed to give the parent company access to group cash and settle the increasing debt, Vedanta is left Vedanta with a higher financial leverage on the books and reduced cash surplus over the medium term.