Vedanta Q4 profit seen at Rs 2,391 cr on strong volume, rise in commodity prices

Diversified natural resources company Vedanta's fourth quarter profit is expected to be at Rs 2,390.79 crore against loss of Rs 11,181 crore in same quarter last year.

In Q4FY16, profit included an exceptional loss of Rs 12,312 crore.

Revenue during the quarter is seen rising 39 percent to Rs 21,961.8 crore compared with Rs 15,797 crore in corresponding quarter of last fiscal.

Earnings may look great led by strong volume-and price-led growth in zinc and aluminum. It may also benefit from ramp-up of aluminum, power volumes and strong iron-ore earnings.

Operating profit is likely to increase 103 percent year-on-year to Rs 7,056 crore and margin may expand 1000 basis points to 32 percent in the quarter gone by.

Tax expenses are expected to be higher due to the treatment of dividend distribution tax on dividend income received from Hinudstan Zinc.

Subsidiary Hindustan Zinc in focus
-Vedanta owns 65 percent stake in Hindustan Zinc
-Approximately 55 percent of Vedanta's EBIT comes from Hindustan Zinc

Subsidiary Cairn India in focus:
For Q4FY17, Vedanta owned 59 percent stake in Cairn India
-In April 2017: Vedanta received final approval for the Cairn merger
-April 27 was the record date for the share swap
-Cairn India shares do not trade on bourses currently

Remaining business: Base metals rally in past 1 year YoY
Zinc 65 percent
Aluminum 22 percent
Lead 28 percent
Copper 25 percent
Base-metal prices increased by 6-10 percent QoQ

Aluminum
Profitability in aluminum may be supported by improved pricing and higher volumes
-Aluminum volumes higher due to higher output from Balco’s new projects and Jharsuguda-II ramp up
-Lower e-auction prices of coal may aid profit
-LME gains are partially offset by higher alumina cost

Iron ore
-Iron ore operations may deliver higher volumes and profitability
-Better sales volume post reduction of export duty on low grade iron ore in Budget