Vedanta Limited: Navigating Volatility with Record Performance and Strategic Growth in Q2 FY26

Vedanta Limited, a diversified natural resources conglomerate, has demonstrated remarkable resilience and strategic foresight, delivering its highest ever second-quarter revenue and EBITDA for Q2 and H1 FY26. Despite a global landscape marked by commodity price volatility and geopolitical uncertainties, the company's disciplined operational approach and focus on cost efficiency have propelled it to a strong financial position. For the second quarter ended September 30, 2025, Vedanta reported a consolidated revenue from operations of 39,218 crore, marking a robust 6% year-on-year (YoY) growth. This impressive top-line performance was complemented by a record EBITDA of 11,612 crore, a significant 12% YoY increase, with the EBITDA margin expanding by 69 basis points to 34%. The profit after tax (PAT) before exceptional items stood at 5,026 crore, up 13% YoY, underscoring the underlying profitability of its diverse operations.

Segmental Performance: A Story of Growth and Efficiency

The company's various business segments contributed significantly to this stellar performance. The Aluminium segment, a key driver, achieved record quarterly alumina production of 653 kilotons, surging 31% YoY, and record cast metal production of 617 kilotons, up 1% YoY. This was bolstered by the commissioning of the new BALCO smelter and the first alumina output from Lanjigarh's Train II. The Zinc India business also reported its highest-ever second-quarter mined metal production at 258 kilotons, a 1% YoY increase, alongside achieving its lowest Q2 cost of production in five years at $994/ton. Zinc International mirrored this success, with mined metal production jumping 38% YoY, primarily driven by a 54% increase at Gamsberg.

Vedanta's Oil & Gas segment, while facing natural declines in some fields, saw its OPEX decrease by 4% quarter-on-quarter due to optimized polymer injection and reduced maintenance. The Power business achieved its highest-ever quarterly generation of 3.9 billion units, up 8% YoY, further enhanced by the commissioning of Athena 600MW and Meenakshi 1000MW, expanding merchant power capacity to 4.2 GW. The Iron Ore, Steel, Copper, and Ferrochrome segments also showed varied performance, with Iron Ore production up 48% YoY at IOG and record quarterly Pig Iron production up 26% YoY.

Strategic Initiatives and Financial Prudence

Vedanta's commitment to growth is evident in its significant capital expenditure, with approximately USD 0.9 billion invested in H1 FY26, on track for a full-year guidance of USD 1.7-1.9 billion. Key projects like the Gamsberg Phase-II expansion and the Zinc tailings reprocessing plant are progressing well, promising future capacity additions and enhanced sustainability. The company also secured three new strategic mineral blocks under India's Critical Minerals mission, expanding its resource portfolio.

Financially, Vedanta has strengthened its balance sheet, with the net debt to EBITDA ratio improving to 1.37x. Both CRISIL and ICRA have reaffirmed Vedanta's 'AA' credit rating, reflecting confidence in its financial stability. The parent company, Vedanta Resources, successfully refinanced $550 million of high-cost debt, reducing overall interest costs to ~10% and extending average debt maturity to ~4.5 years. This proactive debt management aligns with the company's goal to bring its average cost of borrowings below 8% in the near term.

Outlook: Confident Growth and Value Creation

Looking ahead, Vedanta's management expressed confidence that FY26 will be its strongest year ever, with full-year EBITDA expected to surpass the historic best of ~USD 6 billion achieved in FY22. This optimism is fueled by ongoing capacity expansions, production growth across core segments, and a recovering commodity price environment. The proposed demerger into five distinct entities is also in its final stages, with the NCLT hearing scheduled for November 12, 2025, aiming to unlock significant shareholder value by creating focused business verticals.

Despite the impact of one-time exceptional items on reported PAT and some sub-judice matters like the Cambay block PSC extension, Vedanta's strategic clarity, operational efficiency, and disciplined financial management position it for sustained growth and value creation. The company's focus on ESG, evidenced by Hindustan Zinc becoming the first Indian company to join the International Council on Mining and Metals, further solidifies its long-term sustainability credentials.