VEDL - Vedanta

📊 NSE: VEDL 🏢 Mining / Minerals / Metals 📅 Last Updated: 12/14/2025 15:00

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 reached INR 39,218 Cr, growing 6% YoY. H1 FY26 revenue stood at INR 76,652 Cr, also up 6% YoY. While specific segment revenue growth percentages were not fully itemized, the growth was driven by volume increases in Aluminium and higher metal prices (Aluminium up 15% YoY, Zinc up 16% YoY).

Geographic Revenue Split

Not disclosed in available documents; however, the company maintains a dominant position in the domestic Indian market for Zinc, Aluminium, and Oil & Gas.

Profitability Margins

Profit After Tax (PAT) before exceptional items for Q2 FY26 was INR 5,026 Cr, a 13% YoY increase. Return on Capital Employed (ROCE) improved by 347 basis points YoY to approximately 26%, reflecting disciplined capital allocation.

EBITDA Margin

Q2 FY26 EBITDA reached a record INR 11,612 Cr, up 12% YoY, with margins expanding by 69 bps to 34%. H1 FY26 EBITDA was INR 22,358 Cr, up 8% YoY. The margin expansion is attributed to lower interest rates and improved cost efficiencies in the Zinc and Aluminium segments.

Capital Expenditure

H1 FY26 growth capex was $0.9 billion (approx. INR 7,500 Cr). Planned capex for FY26 is estimated between INR 19,000 Cr and INR 20,000 Cr, focusing on capacity expansion and efficiency improvements.

Credit Rating & Borrowing

CRISIL and ICRA reaffirmed ratings at 'AA'. Borrowing costs at the Vedanta Limited level stood at approximately 9% as of Q2 FY26, a reduction of 150 bps YoY. Parent company VRL's interest cost reduced to approximately 10%.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Bauxite (for Aluminium), Alumina, Iron Ore, Coal (for power generation), and Crude Oil. Specific cost percentages per material were not disclosed, but the company emphasizes a low-cost production model for Zinc and Aluminium.

Import Sources

Not specifically detailed, though the company operates domestic mines for Zinc and Iron Ore and has global operations through Zinc International.

Key Suppliers

Internal sourcing from subsidiaries like Hindustan Zinc Limited (HZL) and BALCO; external sourcing includes global mining and energy providers.

Capacity Expansion

Merchant Power capacity expanded by 1.3 GW. New output commenced from the BALCO smelter and Lanjigarh Train II. Aluminium smelter and refinery capacities are expected to be commissioned by Q3 FY26.

Raw Material Costs

Raw material costs are managed through vertical integration (e.g., captive bauxite and coal). Profitability in Oil & Gas is aided by a low operating cost model that ensures capex recovery.

Manufacturing Efficiency

EBITDA margin of 34% reflects high efficiency. Operational improvements in Cairn Oil & Gas helped offset natural declines in production fields.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be achieved through the commissioning of the BALCO smelter and Lanjigarh refinery expansion, a demerger into five focused verticals to unlock value by end of FY26, and a target to reach an annual EBITDA of over $6 billion (approx. INR 50,000 Cr) for Vedanta India consol in FY26.

Products & Services

Zinc ingots, Lead, Silver, Aluminium ingots and billets, Crude Oil, Natural Gas, Iron Ore, Steel, and Merchant Power.

Brand Portfolio

Vedanta, Cairn (Oil & Gas), Hindustan Zinc (HZL), BALCO.

New Products/Services

Expansion into Semiconductor and Display production is at a nascent stage with no immediate capital outlay; acquisition of Incab Industries Limited for expansion into industrial cables.

Market Expansion

Focus on increasing domestic market share in India's base metals and energy sectors; demerger into five entities to allow for independent market-specific growth.

Market Share & Ranking

Largest domestic producer in Zinc, Lead, and Silver; among the largest in Aluminium and private sector Oil & Gas in India.

Strategic Alliances

NCLT approval for the acquisition of Incab Industries Limited; previous JV with Foxconn for semiconductors was called off, now being pursued independently.

🌍 External Factors

Industry Trends

The industry is shifting toward integrated ESG-compliant mining. Vedanta received its ESG Rating Rationale for FY 2024-25 in Dec 2025, indicating a focus on sustainable operations to maintain global competitiveness.

Competitive Landscape

Competes with global miners like Rio Tinto and domestic peers like Hindalco and Tata Steel. Vedanta maintains a leverage ratio (Net Debt/EBITDA) of 1.37x, which is competitive against the industry average of 1.5x.

Competitive Moat

Cost leadership in Zinc and Aluminium due to large reserves and low-cost production models. The diversified portfolio (Zinc, Oil, Al, Steel) provides a durable advantage against commodity-specific downturns.

Macro Economic Sensitivity

Highly sensitive to global metal demand (especially from China) and LME price fluctuations. Aluminium prices rose 15% and Zinc 16% YoY, directly driving the 12% EBITDA growth.

Consumer Behavior

Increasing demand for Aluminium from the EV and renewable energy sectors is driving volume growth.

Geopolitical Risks

Global demand uncertainty and trade barriers affecting metal exports/imports; regulatory risks regarding retrospective mining taxes in India.

⚖️ Regulatory & Governance

Industry Regulations

Mining operations are subject to strict environmental clearances and mineral royalty payments. The Supreme Court's ruling on states' power to tax mineral rights is a key monitorable.

Environmental Compliance

ESG ratings are monitored; the company is investing in 'green' capacity expansions like the Lanjigarh refinery to meet compliance standards.

Taxation Policy Impact

Subject to standard Indian corporate tax; however, the company faces potential retrospective tax demands on mineral rights following a Supreme Court ruling.

Legal Contingencies

Pending NCLT approval for Incab Industries acquisition; potential retrospective tax liabilities on mining are being assessed, though management currently views them as 'not material' based on demands raised to date.

⚠️ Risk Analysis

Key Uncertainties

Volatility in commodity prices (Aluminium/Zinc/Oil) and the timely completion of the demerger process. Any delay in the $6 billion EBITDA ramp-up could affect deleveraging targets.