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Last Updated : Oct 28, 2016 01:36 PM IST | Source: CNBC-TV18

Vedanta Q2 profit seen down 5%, debt repayment outlook key

Vedanta, an associate company of the London Stock Exchange listed diversified resources group Vedanta Resources Plc, is expected to report a 5 percent degrowth in second quarter profit at Rs 930 crore and a 6 percent fall in revenue at Rs 15,519.3 crore on yearly basis, according to analysts polled by CNBC-TV18.

 
 
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Vedanta, an associate company of the London Stock Exchange listed diversified resources group Vedanta Resources Plc, is expected to report a 5 percent degrowth in second quarter profit at Rs 930 crore and a 6 percent fall in revenue at Rs 15,519.3 crore on yearly basis, according to analysts polled by CNBC-TV18.


Results are not important to watch out for as it already has Hindustan Zinc and Cairn India's numbers but the commentary is key.


Vedanta owns 59 percent stake in Cairn India and 65 percent stake in Hindustan Zinc. Both companies announced better-than-expected earnings.

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Operating profit is likely to rise 3 percent year-on-year to Rs 4,117.1 crore and margin may expand 230 basis points to 26.5 percent in the quarter ended September 2016.


Commodity prices may drive earnings of the company. Analysts expect a stable performance backed by improvement in iron ore, aluminum and power segments.

Factors to watch out for would be:
-Profitability in aluminum on improved pricing and lower cost
-Vedanta may also benefit from ramp-up of aluminum
-Aluminum volumes may increase on the back of higher output from Balco's new projects while Jharsuguda-II is still ramping up
-Iron ore operations may deliver higher volumes and profitability post reduction of export duty on low grade iron ore in Budget
-In power, there may be better utilisation 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
-Management remarks on debt repayment and Cairn merger timeline

First Published on Oct 28, 2016 10:51 am
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