Vedanta Q4 preview: Here's what four brokerage firms expect from the mining major

Anil Agarwal-led Vedanta is set to report its earnings for the period ended on March 31, 2023 on Friday, May 12. The company's performance is likely to be a mixed bag with realization and volumes to be key triggers for the brokerage firms tracking the commodity play stock. Market analysts expect Vedanta to report a steep fall in revenue, EBITDA and profit after tax (PAT) on a quarter-on-quarter (QoQ) basis on the back of lower volumes from steel, zinc, copper and aluminium. However, the EBITDA margin is seen expanding more than 500 basis points (bps) sequentially. On the other hand, year-on-year performance is healthy but margins may take a hit. Brokerage firms expect Vedanta to report better realisations, coupled with lower cost of production (CoP) and its higher volumes and realisations to boost EBITDA in the March 2023 quarter. Analysts see better power generation and sales but no major surprise expected. Phillip Capital expects Vedanta to report a revenue of Rs 34,733.5 crore, down 12.8 per cent YoY and up 2 per cent QoQ, with an EBITDA of Rs 8,245.3 crore falling 39.5 per cent YoY. Net Profit (after minority) is seen at Rs 3,949.8 crore, up 153 per cent QoQ, but down 35.6 per cent YoY. Volumes are flattish to lower in business segments. LME Aluminium, lead and zinc have increased by 3 per cent, 2 per cent and 4 per cent sequentially coupled with Lower CoP to push EBITDA higher. O&G suffered on 7 per cent lower crude and lower volumes, said Phillip Capital. Nuvama Institutional Equities pegged Vedanta's revenues at Rs 33,037.2 crore, up 17% YoY but down 3.1 per cent QoQ, while EBITDA ise seen at Rs 8,376.4 crore, down 38.6 per cent QoQ. The company is likely to report an adjusted net profit of Rs 2,707.9 crore, falling about 56 per cent QoQ but rising 120 per cent YoY. Vedant'as EBITDA ex-Hindustan Zinc is likely to improve by 38.7 per cent QoQ to Rs 4,368.5 crore primarily due to improvement in Aluminium and Zinc international division. Aluminium EBITDA is likely to see an improvement of 67 per cent. With rise in steel prices and benefits of debottlenecking, we expect the steel division to report a positive EBITDA of Rs 218.7 crore compared to loss of Rs 66 crore reported in Q3FY23, Nuvama said. "We forecast a 36 per cent yoy decline in EBITDA due to weaker yoy commodity prices across segments. Sequential improvement led by moderation in costs," said Kotak Institutional Equities, which sees EBITDA margins at 25 per cent, falling 922 bps YoY but up 527 bps QoQ. "It forecasted Aluminum EBITDA to decline by 68 per cent YoY but increase 76 per cent QoQ mainly led by lower costs and marginal improvement in realizations/volumes, while Oil and Gas division to witness 7.6 per cent QoQ  drop in EBITDA due to windfall tax and lower crude prices during quarter and Zinc India division to see 16 per cent qoq increase in EBITDA on the back of record yearly volumes," Kotak said. Consolidated revenue is forecast to decline 10 per cent YoY to Rs 35,662.2 crore impacted by lower realizations across commodities partly offset by rupee depreciation. EBITDA at Rs 8,046 crore would decline 41 per cent YoY impacted by lower realizations and higher input costs sharply affecting the aluminum segment. Adjusted profit is expected to decline to Rs 2,064.1 crore, said Antique Stock Broking.