Billionaire Anil Agarwal-led mining firm Vedanta's first quarter earnings are expected to be weak on the back of Cairn India’s subdued numbers (due to sharp fall in crude oil prices).
Its profitability is solely driven by Hindustan Zinc and Cairn India, wherein company owns 65 percent and 59 percent stake, respectively. Both companies contribute around 75 percent of the total EBITDA of Vedanta.
Consolidated profit after tax may surge 125 percent year-on-year to Rs 844 crore and revenue is seen rising 2 percent to Rs 17,505 crore in June quarter, according to average of estimates of analysts polled by CNBC-TV18.
The increase in bottomline will be due to low base in the year-ago period. In Q1FY15, earnings included a extraordinary charge of Rs 1,627.4 crore, representing retrospective effect of the depreciation accounting change made by Cairn India.
Operating profit may fall 22 percent year-on-year to Rs 4,420 crore and margin may decline 800 basis points to 25 percent during the quarter. Earnings from iron ore, power and international zinc businesses may remain weak during the quarter, feel analysts. Hindustan Zinc (HZL) numbers were good on lower District Mineral Fund (DMF) provision and lower taxes. Normalisation of Skorpion operations at zinc international may support.
Copper business is expected to report steady earnings as it may benefit from rising Tc/Rc charges. In Q1FY15, copper EBIT declined due to lower volumes from a 23-day maintenance shutdown and high repairs & maintenance cost.
Iron ore business may continue to struggle owing to slow resumptions of mines and weak iron ore prices. Aluminium business may be hit by lower realisations but aided by higher volumes. Benefits from ramp up in aluminium smelters at BALCO & Vedanta Aluminium may continue and aluminium EBITDA may fall on sharp drop in spot premiums, impacting realisations.
Power business could suffer due to lower volumes and realisations.
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