VEDANTA'S WHOLLY OWNED SUBSIDIARY HINDUSTAN ZINC REPORTED A HEALTHY PERFORMANCE FOR Q4FY25

News: Vedanta's wholly owned subsidiary Hindustan Zinc reported a healthy performance for Q4FY25. Total operating income for the quarter came in at ₹9,087 crore (up 20% YoY, 5% QoQ) with mined metal production stood at 310 kt (up 4% YoY, 17% QoQ) and refined metal production were at 270 kt (down 1% YoY, up 4% QoQ). Refined zinc production for the quarter was at 214 kt (down 3% YoY, up 5% QoQ) and lead production was at 56 kt (up 6% YoY, 2% QoQ). Saleable silver production stood at 177 MT (down 7% YoY, up 11% QoQ) Reported consolidated EBITDA for the quarter stood at ₹4,820 crore with corresponding EBITDA margins at 53%, up 470 bps YoY. Resultant PAT for the quarter stood at ₹3,003 crore, (up 12% QoQ). Additionally, as per media sources, the company plans to foray into potash mining by targeting Rajasthan block, which has potential lithium reserves.   

View: Revenue growth for the quarter was driven by higher zinc and silver prices, which rose by 16% and 37% YoY to ~$2,838/ton and ~$31.9/oz, respectively. In addition, the cost of production dropped below $1,000/ton, the lowest in the past 16 quarters. This was driven by better metal grades and recovery, and lower input costs, thereby contributing to robust EBITDA for the quarter. It aims to scale up mined metal production from the existing 1.2 MT to 1.5 MT over the next two years. Moreover, it is targeting an increase in renewable energy sourcing from the current 15% to 30%, which will result in lower production costs and boost margins for the company in FY26. Consequently, the higher volume growth target and cost optimization initiatives will also benefit Vedanta, given that Hindustan Zinc contributes ~20% and 37% to Vedanta’s consolidated revenue and EBITDA, respectively. Thus, we have a positive view on Vedanta, as its one of the leading global metal players with a sizeable presence in aluminium and zinc segment, healthy capacity expansion, capital efficient business model with return ratios of +20%, and offers a healthy dividend yield of ~10%.

Impact: Positive