Vedanta Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Vedanta Limited (VEDL) Q4 FY22 Earnings Concall

Management Update:

• VEDL said it delivered best-ever annual financial performance for FY22 with an EBITDA of INR45,319 crores and strong free cash flows driven by record volume growth across key businesses.

Q&A Highlights:

• Amit Dixit from Edelweiss asked about the time line, the volume and the premium that Restora and Restora Ultra will have over the regular aluminum product. Sunil Duggal Group CEO said this is enabling the company to earn a good premium from the export market.

• Pinakin Parekh from JPMorgan asked about the expected volumes from Jamkhani, Radhikapur and Kuraloi, and the total all in cost at these mines. Sunil Duggal Group CEO said that Jamkhani has a licensed capacity of 2.6 million tonne per annum (TPA) and estimated cost is around INR0.80 per GCV. Radhikapur has a capcity of 6 million TPA and potential cost could be INR0.53 per GCV. Kuraloi has a capacity of 8 million tonnes. The total avg. all in cost could be INR0.57-0.60.

• Pinakin Parekh from JPMorgan enquired about net debt reduction expected in FY23 in the parent unlisted entity. Ajay Goel Deputy CFO said Vedanta Resources’ (VR) debt at standalone is about $8.9 billion. And on the promise of deleveraging VR of $4 billion in 3 years, the whole amount will not be back-ended, but will be front-ended. So at least deleveraging $1 billion in FY23 is the target.

• Vishal Chandak from Motilal Oswal queried about the repayment schedule at the parent and what’s the schedule of repayment at the promoter entities for the next 2 years. Ajay Goel Deputy CFO said in 1H23, almost $2 billion worth of loans are falling due for repayment. In 2H23 it’s almost $0.7 billion. So in FY23, the value is about $2.7 billion, and in FY24 it’s about $3 billion.

• Ritesh Shah from Investec asked that on the gas side and the partnership with GAIL, how should one look at the volume and economics over there. Sunil Duggal Group CEO said it is at the feasibility stage. The pipeline has to be connected from the GAIL pipeline to the complex, which will also need capex. It is going to be cheaper than what VEDL is doing today. A benefit of 30-40% should come.

• Rahul Jain with Systematix asked about coal sourcing cost outlook in the next two quarters. Sunil Duggal  Group CEO said market is volatile and the company is doing what it can. And anything which has happened in 3Q, 4Q has picked up and from now on with VEDL’s initiatives, the coal cost should become better from now on.

• Rahul Jain with Systematix enquired about the capex number in the oil and gas business for FY23. Prachur Sah Dy. CEO said the capex number for FY23 is $687 million, out of which close to [50%] is in the infill projects to manage the natural decline. And the remaining is on the 3 growth projects mentioned.

• Bhavin Chheda from Enam Holdings asked about the approval status of aluminum expansion to 3 million tons and the order number. Sunil Duggal Group CEO replied that the proposal by EAC has been cleared. And VEDL may get EC at any point of time. In the meantime, ordering and the [attending] is being finalized and the shovel will be on the ground soon.