Vedanta's Profit Drops 23.5% As COVID Lockdown Hurts Output, Demand

Billionaire Anil Agarwal's commodities conglomerate Vedanta posted a 23.5 per cent drop in quarterly profit as one of the world's strictest lockdowns hit production and demand. Group net income slumped to ₹ 1,033 crore ($141 million) in the three months to June from ₹ 1351 crore a year earlier, the company said in a statement late Saturday. Sales fell 25.9 per cent to ₹ 15,687 crore.

Key Insights

Vedanta's main businesses include zinc, aluminum and oil and gas, all of which have been hit by a slump in demand due to the coronavirus pandemic.

Agarwal's London-based Vedanta Resources is in the process of taking the Mumbai-listed Vedanta private by buying out minority shareholders to simplify his investments.

Vedanta Resources is in talks with banks for a further $600 million to finance the delisting after already securing $3.15 billion in loans and bonds, according to people familiar with the information.

Vedanta had net debt of ₹ 24,787 crore at the end of June.

Vedanta's Hindustan Zinc, also Asia's most valuable zinc producer, reported a 23 per cent drop in June-quarter profit on lower prices and production.

India's economy posted its worst slump in the three months ended June as disruptions caused by the Covid-19 outbreak brought Asia's third-largest economy to a halt. Economists expect growth to shrink in the year through March 2021, in the first such contraction in more than four decades.

Market Reaction

Shares of Vedanta rose 0.4 per cent on Thursday to close at ₹ 137.45 in Mumbai. The stock has slid 9.8 per cent this year compared with a 6.2 per cent fall in the BSE benchmark index.

Analysts have 11 buy recommendations on the company, 4 holds and 0 sells, according to data compiled by Bloomberg.

Original News: Economy | (c) 2020 Bloomberg | Swansy Afonso and Baiju Kalesh, Bloomberg

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