Vedanta scales back FY23 capex guidance by 20%; expects lower cost of production in H2FY23

Vedanta has paid the second interim dividend of Rs 19.5 per share (Reuters file image)

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26 Aug, 2025 12:21

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Vedanta has scaled back its financial fear 2023 guidance by 20 percent to $1.6 billion, compared to the $2 billion planned earlier. The company has trimmed the capital expenditure (capex) plans for the aluminium and power division by almost 40 percent to $0.6 billion from $1 billion envisaged at the start of the financial year. However, it kept the capex guidance steady for other divisions such as oil & gas, and zinc, among others.

Lowers cost guidance for H2FY23

Vedanta also sees lower cost of production (CoP) from aluminum, and zinc (India and international businesses), as compared to the CoP witnessed in the first half of the financial year. Depletion of higher cost alumina, power cost reduction and better coal linkages were cited as some of the reasons for the lower cost of production for aluminium by the management of the company.

Vedanta’s consolidated performance

Vedanta’s Q2 EBITDA decreased by 24 percent YoY to Rs 8,038 crore on account of input commodity inflation and lower output commodity prices, partially offset by improved operational performance, hedging gains and foreign exchange gains, said the CFO in an earnings concall. The company reported 84 percent YoY decline to Rs 761 crore in the aluminium division, 46 percent drop in power division and 62 percent decline in iron ore division. It also posted a net loss for the steel division.

Other concall highlights from the CFO:

• Free cash flow fee capex for the quarter is more than 70 percent of EBITDA
• The EBITDA-to-cash conversion ratio has improved almost 2 times of the recent past
• ROCE of 28 percent is higher by 2 percent of last year's number of 26 percent
• The company has paid the second interim dividend of Rs 19.5 per share, amounting to Rs 7,249 crore in Q2
• The sequential increase in net debt is due to the amount invested in capex via borrowed resources
• On track to reduce debt at holding company, VRL, by $4 billion in 3 years. In H1FY23, debt reduction stood at $1.4 billion
• VRL’s total liabilities in FY23 beginning stood at $3 billion. Of that, almost $1.4 billion deleveraging has been done.