Vedanta Q2 FY27 Earnings Call: EBITDA Doubles To Record Rs. 9,938 Cr, Net Cash Positive Seen In Q3 (VEDL)

Record Quarter: EBITDA Doubles, Margins Near 60%

• Revenue +57% YoY to Rs.25,812 crore — Q2 FY 2026-2027 consolidated, with EBITDA up 106% YoY to a highest-ever Rs.9,938 crore.
• EBITDA margin of ~60% — a record for Q2 FY 2026-2027 (vs 49% in Q2 FY 2025-2026), excluding the copper business, attributed to asset quality and cost management.
• PAT +151% YoY to Rs.6,202 crore — with pre-capex free cash flow of Rs.5,803 crore in Q2 FY 2026-2027 and Rs.10,215 crore in H1 FY 2026-2027.
• Net debt reduced to Rs.3,675 crore in H1 FY 2026-2027 — net debt/EBITDA at 0.1x, described as amongst the industry's best; Vedanta Ltd on track to turn net cash positive in Q3 FY 2026-2027.
• First interim dividend of Rs.5 per share — declared in Q2 FY 2026-2027; growth stated to be self-funded (growth capex of Rs.1,135 crore in Q2, Rs.2,283 crore in H1 FY 2026-2027).

Zinc India Records; Copper Cathode at All-Time High

• Zinc India record quarter — mined metal 271 KT (+5% YoY), refined metal 264 KT (+7% YoY) on smelter debottlenecking; record silver production of 173 tonnes (+20% YoY).
• Zinc cost of production down 29% YoY to $703/tonne — driven by better mined grades, higher metal production and stronger byproduct realizations.
• Copper cathode production of 46 KT (+15% YoY) — highest-ever quarterly output; Fujairah sales were impacted by supply-chain disruptions from the closure of the Strait of Hormuz, though operations have since normalized and management expects quarterly run-rates to improve to 20,000 tonnes+ by Q3 FY27.
• Zinc International mined metal of 53,000 tonnes — Black Mountain produced 7.1 KT metal-in-concentrate with plant operations stabilized; Gamsberg Phase 2 has started operations.
• FACOR EBITDA of $8 million, +267% YoY — ferrochrome production +26% YoY to 24 KT; 100% captive ore sourcing strengthens its cost position versus external procurement.
• 11 critical mineral blocks secured — covering manganese, graphite, vanadium, cobalt, tungsten, nickel and rare earth elements, with 5 under exploration.

Self-Funded Pipeline; Zinc International Expansion on Hold

• FY 2026-2027 capex guidance of ~Rs.6,500 crore — per the CFO, ~Rs.4,000 crore in Zinc India and ~Rs.2,500 crore split between Zinc International and ferrochrome; no FY 2027-2028 capex figure was provided for the broader company.
• Q2 FY 2026-2027 growth capex of Rs.1,135 crore — across Gamsberg Phase 2 commissioning, the 250,000 tpa integrated zinc smelter at Devari, and expansion of FACOR's ferrochrome capacity to 450,000 tpa.
• Saudi Arabia 155 KTPA copper rod plant — commissioning targeted for Q3 FY 2026-2027, which management called "for certain"; Middle East copper capex will start in H2 FY 2027-2028 at the earliest, with quantum to be announced in the next business plan year (FY 2027-2028).
• Zinc International 1 MTPA expansion has no immediate capex announcement — Group CEO Arun Mishra said the priority for the next 3-6 months is stabilizing the current expansion, with the concentrator's production generating cash to fund further growth; only pre-project expenses may be incurred in the interim.
• International zinc scale-up cost estimate of Rs.80,000–Rs.100,000 crore — management's estimate, benchmarked against Hindustan Zinc's past capex, to grow the business to 1 million tonnes (period unspecified); EBITDA, costs and payback were not quantified.
• FACOR 75 MVA furnace expansion on track for H2 FY28 — and a favorable Odisha High Court order for the Katasai mine supports planned restart of mining operations in H2 FY 2026-2027.

Parent Deleveraging on Track; $3bn Target Intact

• VRL debt flat at $5.2 billion in FY 2026-2027 — Group CFO Ajay Goel said Vedanta has to fund KCM; the original plan was for KCM to be self-funded via its IPO, and the timing of KCM going public remains an open question.
• VRL deleveraged by more than $2 billion at the VRL level in H1 FY 2026-2027 — with ~$1 billion more expected in FY 2026-2027, taking VRL debt to about $4.6 billion in H2 FY 2026-2027 as remaining companies pay dividends (at their own discretion).
• $3 billion VRL debt target "absolutely intact" — per the CFO, over the next 3 years (2028-2030), with $0.5-0.7 billion of deleveraging every year via 4-5% dividend payout, almost $2 billion cumulatively.
• $1bn Citibank bridge facility maturing July 2027 (FY 2027-2028) — targeted to be refinanced by end of January (FY 2026-2027) via bonds and other revenues; FY 2027-2028 interest cost of ~$400mn to be fully met by brand fees, with ~$700mn of routine loans plus KCM obligation met through dividends.
• VRL raised $2.15 billion via international bonds and $1.85 billion of syndicated term loans in H1 FY 2026-2027 — standalone net debt ~$5.2 billion at ~7.1% average borrowing cost, average maturity extended to over 4.5 years; S&P and Fitch at BB (stable), Moody's at Ba3 (positive) — a decadal-high rating.
• Dividend policy relaxed post-demerger — the board's adopted policy removed the minimum 30%-of-PAT payout commitment and the compulsory pass-through of Hindustan Zinc dividends; payout quantum is now at the board's discretion. Management committed to group companies paying 3-5% dividend yield (period unspecified).
• Promoters have no plan for further equity sales — Vedanta Resources would like to hold at least a 51% mathematical majority across all five listed companies; combined debt stood at almost $9.9 billion at September-end (VRL $5.2 billion, Vedanta India ~$4.9 billion).

Ramp-Up Underway; Cost Path to ~$1,300/tonne

• Gamsberg Phase 2 cost of production at $1,500–$1,600/ton in FY 2026-2027 — Group CEO Arun Mishra said management is targeting ~$1,500/ton at the current operating level.
• Cost may fall to ~$1,300/ton — if recovery improves from the current ~70% to 75-80%; Group CFO Ajay Goel indicated the cost target is set for Q4 FY 2026-2027.
• Phase 2 volumes of ~15 KT expected to rise to 30 KT — over the next couple of quarters (through ~Q4 FY 2026-2027), with the ramp-up almost complete by H2 FY 2027-2028 per management confirmation.
• Production guided closer to 500 KT at the MIC level in ~FY 2028-2029 — reiterated by the CFO as Phase 2 ramps up; no EBITDA guidance for Phase 2 at current zinc prices was provided despite the analyst's request.

Hedging, Saudi Integration and Watch Items

• Tactical hedging positions as of the Q2 FY 2026-2027 call — 80kt in Zinc India at about $3,600/tonne, 9 tonnes of silver at about $68/troy ounce, and 75kt in Zinc International at $3,300/tonne.
• Saudi copper success hinges on full integration — management said the project depends on becoming fully integrated rather than only a conversion business, contingent on exploration of the mine provided and fiscal incentives from the government for better project IRR; grade details will be shared once drilling starts, and management cannot base predictions on the government's indicated grade alone.
• Saudi mining operations expected to start in ~2 years (~FY 2028-2029) — licensing agreement about to be signed and an exploration agency being appointed; the smelter is "a certainty" per management, viable via imported and/or domestically produced Saudi concentrate.
• One-time bond-raising costs front-loaded in FY 2026-2027 — from the $4.5 billion bond raising, while the interest-cost benefit extends over the next 8 years.
• Post-demerger positioning — Vedanta Ltd as a focused operating company with growth engines across Hindustan Zinc, Zinc International, Ferrochrome, Copper, Port and Nicomid, plus an emerging critical minerals portfolio; stated model is to generate strong cash, reinvest to expand capacities, and reward shareholders.