Vedanta Ltd shares saw a slight increase on Friday as the company reported its highest-ever aluminium production in the second quarter (Q2) of the financial year (FY) ending 30th September 2024. The rise in production has positioned Vedanta as a key player in the metals and mining industry, showcasing its robust operational performance.
The rise in aluminium production comes as investors are closely evaluating opportunities to invest in stocks that demonstrate consistent growth and profitability.
In early trading, Vedanta shares were priced at ₹512.05, reflecting a marginal rise of 0.05% after the company's announcement. This boost in stock price aligns with investor expectations as Vedanta’s Board of Directors prepares to discuss and potentially approve a fourth interim dividend for FY25 at their upcoming meeting on 8th October.
Highest-ever aluminium production and strong zinc output
In the first half of FY25, Vedanta recorded a significant aluminium production of 1,205 kilotonnes (kt), marking a substantial achievement for the company. The rise in alumina production by 21% year-on-year (YoY) also contributed to the company’s success during this period. The aluminium sector is crucial for Vedanta's revenue stream, and these figures underscore the company’s efficiency in scaling its operations.
Zinc India, another major division of Vedanta, hit new highs in mined metal production, while refined metal production grew by 5% YoY, reaching 524 kt in the first half of the financial year. On a quarterly basis, Vedanta’s aluminium production increased by 3% YoY, totalling 609,000 tonnes in Q2, compared to 594,000 tonnes in the same period last year. These figures reflect the company’s focus on operational excellence and capacity expansion.
Zinc International, copper, and power production gains
Vedanta’s Zinc International operations also performed well, with volumes rising 16% quarter-on-quarter (QoQ). The increase was supported by a 26% jump in production at Gamsberg, one of the company’s major mining assets, and a 4% rise at Black Mountain Mining (BMM). Meanwhile, copper production in India saw a notable rise of 16% QoQ, further strengthening Vedanta’s diverse portfolio of metals.
The company also reported a 10% YoY increase in power sales during the first half of FY25, thanks to enhanced generation from its thermal power plants. These gains were further supported by a sharp 70% YoY growth in ferrochrome production, reaching 53 kt, driven by the commissioning of a new furnace.
Challenges in steel and iron production
Despite these impressive gains in aluminium, zinc, copper, and power production, Vedanta faced some challenges in its steel division. The company’s steel production was negatively impacted in the first half of FY25 due to planned maintenance activities. The shutdown of the Steel Melting Shop and maintenance of the Oxygen Plant in Q2 resulted in lower steel output.
Similarly, pig iron production was adversely affected due to maintenance work, though iron ore volumes increased by 6% to 2.6 million tonnes (mt) during the first half of the year. While these factors posed some operational hurdles, Vedanta’s overall performance remained strong, driven by its record-breaking aluminium and zinc output.
Outlook and investment potential
Vedanta’s record performance in aluminium production and growth across various metal sectors presents a solid case for investors looking to invest in stocks with growth potential. The upcoming announcement on the interim dividend, along with the company’s continuous operational improvements, could further boost investor confidence in Vedanta’s shares. Despite some challenges in steel and iron production, the company remains well-positioned for future growth.
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