At operating level, EBITDA during the quarter is expected to decline 9-17 percent compared to year-ago period
Mining company Vedanta's third quarter earnings are expected to be weak dented by fall in prices of base metals. Brokerages largely expect sharp decline in profit, revenue as well as operating income, but sequentially, bottomline and EBITDA may be higher.
The stock saw a steep fall during the quarter as well as last calendar year. It lost 13 percent in Q3FY19 and plunged 39 percent in 2018 due to weak base metals prices and partial closure of Sterlite Copper smelting plant in Tuticorin.
Brokerages largely expect 10-50 percent on-year decline in profitability, dented by weak operating income and lower revenue growth.
"Lower LME prices across the board YoY will drag down realisations across the product segments. Goa mines remain non-operational, while the copper smelter at Tuticorin also remains shut. Thus, the profitability should be driven by zinc and oil & gas business. On the oil & gas front, we expect Cairn to report 117 bopd production, which is flat on QoQ basis," said Emkay which expects profit to fall 10.7 percent in profit YoY.
ICICI Securities said the decline in prices of major base metals is likely to weigh on Vedanta's Q3FY19 performance. "However, on a YoY basis, the weakness in rupee is likely to provide marginal relief."
The revenue from operations is likely to drop in the range of 4-14 percent. ICICI Securities as well as Edelweiss expect topline to decline around 14 percent each YoY.
At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) during the quarter is expected to decline 9-17 percent compared to year-ago period.
"EBITDA is expected to decline 14.4 percent YoY. The EBITDA margin is likely to remain flattish YoY (27.7 percent in Q3FY19 versus 27.8 percent in Q3FY18)," ICICI Securities said.
According to Edelweiss Securities, EBITDA is expected to be lower by 17 percent YoY owing to lower LME prices, copper division closure and higher cost.
Zinc-International expected to deliver another quarter of subdued performance owing to higher cost and lower realisation, said the research house which expects higher other income owing to dividend from Hindustan Zinc.
But sequentially, Kotak Securities expects increase in EBITDA due to (1) higher EBITDA at Hindustan Zinc aided by higher volumes, zinc prices and (2) increase in Zinc International EBITDA from higher volumes from existing mines and ramp-up of Gamsberg mine.
It further expects sequentially (1) iron ore EBITDA to increase on higher Karnataka volumes post monsoons. "We estimate EBITDA to decline QoQ for (1) oil & gas operations, and (2) aluminum operations due to lower aluminum prices.
Key issues to watch out for
> Progress on ramp-up of 1.25 mtpa smelter.> Movement in base metal prices