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Introduction & Market Context
Vedanta Limited (NYSE:VEDL) delivered its strongest-ever first quarter EBITDA in Q1 FY26, according to the company’s latest earnings presentation. The natural resources conglomerate reported a 5% year-over-year increase in EBITDA to ₹10,746 crore, driven by volume growth across key segments and continued cost optimization efforts.
The company achieved these results while maintaining its focus on deleveraging, with the Net Debt/EBITDA ratio improving to 1.3x from 1.5x in the same quarter last year. This performance comes amid Vedanta’s ongoing expansion projects and strengthening ESG initiatives.
Quarterly Performance Highlights
Vedanta reported revenue of ₹37,434 crore in Q1 FY26, representing a 6% increase compared to the same period last year. The company’s adjusted profit after tax grew by 13% year-over-year to ₹5,000 crore, while EBITDA margins improved by 81 basis points to 35%.
As shown in the following comprehensive overview of key financial and operational metrics:
The quarter was marked by record production volumes across multiple segments. Alumina (OTC:AWCMY) production reached an all-time high of 587 kt, while Hindustan Zinc (NSE:HZNC) Limited (HZL) achieved its highest-ever first quarter mined metal production of 265 kt. The company also reported record ferro chrome production of 28 kt during the quarter.
Cost optimization remained a key focus area, with the company achieving its lowest first quarter cost of production for HZL at $1,010 per tonne, representing a 9% reduction year-over-year. Similarly, aluminum cost of production decreased by 12% quarter-on-quarter to $1,765 per tonne, while Zinc International saw a 21% year-over-year reduction to $1,269 per tonne.
Detailed Financial Analysis
The company’s financial snapshot for Q1 FY26 highlights its strong liquidity position, with cash and cash equivalents of ₹22,137 crore, up 33% year-over-year. The return on capital employed (ROCE) improved by 87 basis points year-over-year to approximately 25%.
As illustrated in the following financial snapshot:
To better understand the drivers behind Vedanta’s EBITDA performance, the company provided a detailed bridge analysis comparing Q1 FY26 to Q1 FY25. While commodity price fluctuations in aluminum and zinc had a negative impact of ₹584 crore, this was partially offset by favorable foreign exchange movements of ₹505 crore. Cost optimization and marketing initiatives contributed ₹489 crore to the EBITDA growth.
The EBITDA bridge analysis is presented below:
Vedanta continued its deleveraging journey during the quarter. The company’s net debt increased slightly to ₹58,220 crore as of June 30, 2025, primarily due to dividend payments of ₹4,280 crore and capital expenditure of ₹5,155 crore. However, this was partially offset by strong operational cash flows of ₹8,307 crore and proceeds from the HZL stake sale amounting to ₹3,028 crore.
The following net debt walk provides a clear breakdown of these movements:
Both Vedanta Limited and its parent company, Vedanta Resources, have made significant progress in their deleveraging efforts. Vedanta Resources reduced its debt by $227 million in Q1 FY26 and aims to further improve its Net Debt/EBITDA ratio from the current 2.0x to below 1.5x in the near term.
The company’s deleveraging trajectory is illustrated below:
Segment-wise Performance
Vedanta’s aluminum business, one of its largest segments, reported a 1% year-over-year increase in production to 605 kt in Q1 FY26. The segment achieved record quarterly alumina production of 587 kt, up 9% year-over-year. Domestic aluminum sales increased by 17% year-over-year to 313 kt.
The aluminum segment’s performance metrics are presented below:
Hindustan Zinc Limited, another key contributor to Vedanta’s portfolio, achieved its highest-ever first quarter mined metal production of 265 kt, up 1% year-over-year. The segment also reported its lowest-ever first quarter zinc cost of production at $1,010 per tonne, representing a 9% improvement year-over-year.
The zinc segment’s operational highlights are shown here:
Zinc International saw significant growth, with total metal in concentrate production increasing by 50% year-over-year to 57 kt in Q1 FY26. Gamsberg’s production jumped 74% year-over-year and 13% quarter-on-quarter. The Gamsberg Phase 2 expansion project is 75.2% complete and is targeted for commissioning in the second half of FY26.
ESG Initiatives and Recognition
Vedanta has strengthened its position as an ESG leader in the mining and metals sector. Hindustan Zinc ranked first among 149 diversified metals and mining companies in the S&P Global Corporate Sustainability Assessment (CSA) with a score of 86/100, placing it in the top 1% globally. Vedanta Aluminum ranked second among 21 aluminum peers with a score of 77/100, earning it a place in the S&P Global Sustainability Yearbook 2025.
The company’s ESG performance is highlighted in the following chart:
Vedanta’s CSR initiatives reached over 2.04 million beneficiaries during the quarter, with a total CSR spend of ₹94.08 crore. The company has spent ₹2,500 crore on CSR activities since 2020 and has established 8,603 Nand Ghars (modern anganwadis) to support early childhood education and women’s empowerment.
Forward-Looking Statements
Looking ahead, Vedanta provided guidance for FY26 across its key business segments. For the aluminum business, the company expects to produce 2.5-2.6 million tonnes of aluminum and 3.0-3.1 million tonnes of alumina, with a cost of production target of $1,700-$1,750 per tonne.
In the zinc segment, Vedanta aims to produce 1,115-1,135 kt of mined metal and 1,090-1,100 kt of finished metal at Zinc India, with a cost of production target of $1,025-$1,050 per tonne. For the oil and gas business, the company expects an average gross volume of 95-100 kboepd with an operating expenditure of $15-16 per barrel of oil equivalent.
The detailed FY26 guidance is presented below:
Vedanta continues to expand its operational footprint with several key projects. The Meenakshi Power Plant’s Phase-1 (300 MW) is now operational, while Phase-2 (Unit-3, 350 MW) was commissioned during the quarter, taking the total commissioned capacity to 650 MW. The company also declared a dividend of ₹7 per share for the quarter.
In conclusion, Vedanta’s Q1 FY26 results demonstrate the company’s ability to deliver strong operational and financial performance while advancing its strategic priorities of deleveraging, cost optimization, and ESG leadership. The company’s record production volumes and improved cost metrics position it well to capitalize on growth opportunities in the natural resources sector.
Full presentation:
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