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Vedanta Q1 net seen down 42%; debt repayment, Cairn merger key

Analysts say commodity prices may drive earnings of the company but profitability already discounted as Hindustan Zinc and Cairn results announced. Hence, commentary on Cairn merger and debt repayment will be closely watched.

July 29, 2016 / 10:00 IST
     
     
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    Moneycontrol Bureau

    Vedanta's first quarter (April-June) profit is seen falling 42 percent year-on-year to Rs 500 crore and revenue may decline 3 percent to Rs 16,500 crore, according to average of estimates of analysts polled by CNBC-TV18.

    Operating profit is likely to slip 7 percent to Rs 3,700 crore and margin may contract by 100 basis points at 22 percent on yearly basis.

    Analysts say commodity prices may drive earnings of the company but profitability already discounted as Hindustan Zinc and Cairn results announced. Hence, commentary on Cairn merger and debt repayment will be closely watched.

    Vedanta owns 59 percent stake in Cairn India, which will be merged with the company soon and 65 percent stake in Hindustan Zinc.

    Hindustan Zinc's topline and EBITDA were far lower than analysts' estimated as the company is undertaking mine development.

    Factors to watch out for:-Higher profitability likely in aluminum on lower cost-Aluminum volumes may increase on the back of higher output from BALCO's new projects (Jharsuguda-II is still ramping up)-Iron-ore operations may deliver higher volumes and profitability-There may be better utilisation in power segment but weak demand & realisation may hit-Copper volumes are likely to recover from maintenance shutdown-Zinc International performance needs to be tracked closely post the jump in zinc prices

    first published: Jul 29, 2016 10:00 am

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