Vedanta Ltd (VEDL) Q1 FY27 Earnings Call: Guides $9.5-10 Billion EBITDA, VRL Debt Halved to $5 Billion

Vedanta Ltd held its Q1 FY27 earnings call on July 30, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Maiden Quarter Post-Demerger Delivers Record Profits

• Vedanta Limited standalone revenue of Rs.23,456 crores in Q1 FY2026-2027, up 51% YoY, driven by strong performance across aluminium, zinc, and steel verticals.
• Record EBITDA of Rs.8,469 crores (+19% YoY) with margin expanding 985 bps YoY to 57%; PAT from continuing operations stood at Rs.5,294 crores.
• Net debt reduced by Rs.2,226 crores during Q1 FY2026-2027; leverage ratio improved to 0.3x and ROCE reached 28%.
• Cash and equivalents of Rs.19,922 crores at end-Q1; standalone credit rating upgraded to AA+ by ICRA and CRISIL (highest in a decade) with stable outlook.
• Combined market cap of demerged entities rose by over Rs.71,000 crores in the two months since demerger (effective May 1, 2026), reflecting investor recognition of the value-unlock thesis.

Aluminium, Zinc, Steel & Copper All Deliver Strong Operational Metrics

• Vedanta Aluminium: record production of 632 KT in Q1 FY2026-2027 (up 5% YoY, 3% QoQ); value-added product output of 389,000 tonnes (up 14% YoY); revenue of Rs.21,105 crores (+45% YoY) and record EBITDA of Rs.10,499 crores (+134% YoY).
• Hot metal cost of $1,698/tonne in Q1 FY2026-2027, down 4% YoY and within the full-year guidance range of $1,650–1,700/tonne; Q2 FY2026-2027 cost expected marginally higher due to planned monsoon power plant shutdowns.
• Zinc India: refined metal production of 2,60,000 tonnes (up 4% YoY) with lowest-ever cost of $851/tonne; silver contributed 46% of Zinc India EBITDA in Q1 FY2026-2027.
• Steel: revenue of Rs.3,662 crores (up 18% YoY) and EBITDA of Rs.515 crores (up 54% YoY) with margin expanding from 11% to 14%; iron ore production rose 4% YoY to 2.6 million tonnes.
• Copper India: sales of 53,000 tonnes (up 3% YoY) — highest first-quarter sales in eight years; Copper International rod sales declined 51% YoY due to geopolitical tensions impacting supply chain.
• Alumina production of 826 KT (up 41% YoY) fell 6% QoQ due to stabilization issues at the power plant, red mud filtration, and bauxite handling; full-year FY2026-2027 alumina target of 4.0–4.1 million tonnes reaffirmed.

VRL Debt Halved to $5 Billion; Refinancing Program Underway

• VRL debt reduced from $10 billion to $5 billion over the past three years (up to Q1 FY2026-2027); management guided further deleveraging of ~$2.4 billion (≈Rs.20,000 crores) in FY2026-2027, targeting reduction to $3 billion.
• VRL sold a 1.7% stake in Vedanta Limited for ~$200 million during Q1 FY2026-2027, and deleveraged by $1.1 billion across the group in the same quarter.
• $5 billion refinancing program initiated at VRL targeting ~280 bps reduction in average funding cost, expected to generate annual interest cost savings of over Rs.1,000 crores (savings period unspecified).
• VRL raised $1.7 billion via international markets at a coupon rate of 7.4% (avg. maturity 8.5 years) and tied up a syndicated term loan of up to $2.25 billion at 6.4% (avg. maturity 3 years).
• VAML net debt stood at Rs.29,500 crores as of end-Q1 FY2026-2027; remaining growth capex of Rs.7,000–8,000 crores on announced projects (BALCO, Lanjigarh, mines) over 18–24 months, with FY2026-2027 growth capex of Rs.5,000 crores plus Rs.2,000 crores in maintenance.
• Dividend yield normalised to 6–7% from the historic 12–13% level; management committed to normalising to ~5% yield, implying a total payout of ~$1.5 billion across all five business units, with Vedanta Aluminium (market cap ~$18–20 billion) expected to contribute roughly half.

Captive Bauxite Ramp-Up, Bokaro Expansion and Gamsberg Phase Two on Track

• CGML captive bauxite mine: EC stage 2 received; management expects mining lease and consent to operate in next couple of months, with production of 1–2 million tonnes likely in Q4 FY2026-2027, subject to government approvals, ramping to 6–7 million tonnes in FY2027-2028.
• ESL Bokaro (VIAEL) expansion: Stage 1 forest clearance received in Q1 FY2026-2027; Stage 2 clearance expected by end of Q2 FY2026-2027, with project completion targeted by end of FY2026-2027.
• Gamsberg phase two plant (adding 200,000 tonnes MIT capacity, total to 450,000 tonnes per annum) likely to commence operations in August 2026 (Q2 FY2026-2027).
• 250,000 tonnes per annum smelter expansion expected commissioning by Q2 FY2028-2029; 10 MTPA tailing reprocessing plant expected completion by Q4 FY2027-2028.
• Power business: targeting 4.8 GW operating capacity by end of FY2026-2027 (from current 4.2 GW), with plans to add another ~7.2 GW starting from FY2029-2030; Shakti Unit 1 restart planned by end of Q2 FY2026-2027 and Unit 2 by Q4 FY2026-2027.
• New 3 MTPA aluminium expansion in groundwork phase (land acquisition, technology partner finalisation); management expects to provide details to the board in about a quarter.

Consolidated EBITDA Guided at $9.5–10 Billion for FY2026-2027

• Management guided consolidated EBITDA of $9.5–10 billion for FY2026-2027, with free cash flow generation of ~$5 billion (≈Rs.45,000 crores) based on a 12% EBITDA-to-cash conversion, allowing simultaneous growth, deleveraging, and dividends.
• Management reiterated target of growing demerged Vedanta to a " $5 billion EBITDA enterprise by FY2029-2030 " as the long-term value-creation milestone.
• Aluminium full-year FY2026-2027 cost guidance of $1,650–1,700/tonne reaffirmed, incorporating an additional $50–100/tonne impact from Middle East disruptions; management expects to stay within range by year-end.
• Oil & gas: full-year FY2026-2027 direct operating costs guided at FY2025-2026 levels; unit opex improved to $17.4/barrel in Q1 FY2026-2027; ~85% of production sold in Q1 with post-monsoon liquidation expected to normalise sales in Q2 FY2026-2027.
• Alumina cost expected to reach ~$750/ton in Q2 FY2026-2027 and further reduce toward $700/ton as Lanjigarh ramp-up and captive bauxite supply increase; captive alumina vs. bought-out cost advantage of $50–60/ton at current API, with additional $40–50/ton savings from CGML ramp-up.
• Q2 FY2026-2027 aluminium cost expected marginally higher due to planned power plant shutdowns during monsoon; 28% of volumes hedged at an average of $3,062/tonne for the balance of FY2026-2027.

Power Sales Surge 38% YoY; Oil & Gas EBITDA Margin at 49%

• Vedanta Power (demerged effective May 1, 2026): sales of 5,224 million units in Q1 FY2026-2027, up 38% YoY; revenue rose 31% to Rs.2,607 crores; EBITDA of Rs.291 crores was impacted by the Shakti boiler incident, though Minaxi Energy delivered its highest-ever quarterly EBITDA of Rs.112 crores.
• Talwandi Sabo plant availability improved to 86% (from 77% QoQ) with 7.9% biomass co-firing (highest in NCR region) and ash utilization maintained at 94%; coal cost at Minaxi contained down 12% YoY by substituting with domestic coal (now 65–70% of consumption).
• Oil & gas: revenue of Rs.2,507 crores in Q1 FY2026-2027 (flat QoQ) despite ~30% higher oil prices, as only ~85% of production volume was sold during the quarter; EBITDA of Rs.1,232 crores (margin 49%) was up 16% QoQ.
• Unit operating cost fell to $17.4 per barrel in Q1 FY2026-2027, down 3% QoQ, driven by workover and well intervention efficiencies; gross operated production averaged 77.7 thousand boe/d (63.1 thousand from Rajasthan).
• Oil & gas PAT from continuing ops was negative Rs.151 crores after a net exceptional cost of Rs.345 crores; total reported PAT of Rs.945 crores includes a one-time profit of Rs.1,097 crores from Malco Energy transfer (discontinued operations).
• Power capital allocation priorities: maintaining liquidity, reducing leverage, enhancing fuel security, completing Shakti Unit 1 restoration and Unit 2 project; long-term rating at AA negative with stable outlook from ICRA and CRISIL.