Vedanta eyes debt-free status as it woos Street with its best-ever April-June operating performance

Vedanta shares jumped on Friday, a day after the mining giant reported its best operating performance in the April-June period, boosted by growth across key segments. The Vedanta stock gained by as much as Rs 10.9 or 4.4 percent to Rs 256.4 apiece on BSE, as the company vowed to be debt-free in the coming years.

Vedanta's quarterly net profit rose 5.9 percent to Rs 5,593 crore compared with the corresponding period a year ago, led by a 36.1 percent rise in revenue to Rs 38,251 crore, according to a regulatory filing.

Vedanta's EBITDA — a key metric that determines a business's short-term operational efficiency — came in at Rs 10,197 crore for the three-month period, up 3.3 percent on year, its highest ever in the first quarter of a financial year.

However, it fell short of the estimate of Rs 10,967 crore by analysts in a CNBC-TV18 poll amid lower-than-expected contribution from aluminium and power segments.

The company's EBITDA margin — a key measure of operating profitability —  came down to 25.7 percent in the June quarter from 34.4 percent in the year-ago period.

The EBITDA from the aluminium unit, at Rs 2,251 crore, fell short of the analysts' estimate of Rs 2,700 crore. The operating performance of oil and international zinc businesses was in line with estimates.

Vedanta Group CEO Sunil Duggal exuded confidence that the company's debt will come down going forward. "The intention is to become debt free at some point of time, but keeping a debt for a mammoth company like ours is also a healthy sign," he told CNBC-TV18.

He said the company's consolidated debt is getting reduced steadily. The company's debt increased 32.3 percent to Rs 26,799 crore in the April-June period.

"Looking at the full potential of our business and the de-bottlenecking, and other expansion plans in the pipeline, we are looking at revenue of $30-35 billion and EBITDA of 12-13 billion and with that, a healthy cash flow and our commitment of deleveraging at parent by $4 billion in the next three years," Duggal added.

The company said it remains focused on sustaining and improving its asset quality, a stable performance and creating long-term shareholder value. It also said its dividend payouts are in line with its strong operational outcomes.

Vedanta remains one of the country's top dividend paying companies. It announced a payout of Rs 31.5 per share in April, and a 19.5 per share one in July 2022, taking its dividend yield to 15.4 percent so far in 2022.

It said its dividend payouts are in line with its strong operational outcomes, enabled by its efforts to improve productivity and efficiency.