Vedanta’s Q4FY20 results were weak, as expected, due to lower commodity prices. Adjusted Ebitda at Rs 4,550 crore (-13% q-o-q, -26% y-o-y) was in line with our estimate of Rs 4,520 crore. Adjusted PAT at Rs 790 crore (-46% q-o-q, -66% y-o-y), however, came in above our estimate of Rs 460 crore, led by lower finance cost.
On a reported basis, however, the PAT loss of Rs 12,080 crore was witnessed due to the exceptional loss of Rs 10,610 crore (net of tax) and exceptional tax booking of Rs 2,430 crore. The exceptional loss was due to the impairment of assets worth Rs 16,580 crore (Rs 15,910 crore in oil & gas due to lower oil prices and Rs 670 crore in copper) and provisions of Rs 560 crore for receivables under litigation. Q4FY20 The tax also had one-off items such as a) Rs 1,700 crore for deferred tax provisions on intra-company distribution profits and b) Rs 730 crore for the part reversal of deferred tax credit booked in Q2FY20. These also resulted in higher reported PAT loss. The share of Hindustan Zinc (HZL) and oil & gas Ebitda (at Rs 2,830 crore) in consolidated Ebitda declined to 62% (v/s 72% in Q3FY20), the lowest in the last four years.
This was largely due to lower commodity prices as well as better profitability in the aluminum business. Oil & gas reported an Ebitda of Rs 870 crore, down 41% q-o-q (52% y-o-y), primarily due to lower oil prices (down 21% q-o-q) and lower volumes (161 kbpd, down 7% q-o-q). HZL had earlier reported an Ebitda of Rs 1,960 crore, down 14% q-o-q, primarily due to lower zinc prices. The aluminum business’ Ebitda improved to Rs 1,140 crore (+43% q-o-q, +186% y-o-y) due to a plunge in hot-metal cost of production (CoP) to $1,451/t (-14% q-o-q), supported by lower coal and alumina cost.
Zinc International reported an Ebitda loss of Rs 61 crore (v/s Ebitda of Rs 1,06 crore in Q3 FY20) due to the double whammy of lower zinc prices and higher CoP ($1,784/t, up 13% q-o-q). Steel Ebitda stood at Rs 270 crore, up 150% q-o-q, on higher Ebitda/t of Rs 8,787/t (up 160% q-o-q). This was achieved via cost cut and higher realization. Q4FY20 Finance cost stood at Rs 1,06.4 crore, down 14% q-o-q (24% y-o-y), due to lower interest cost and debt repayments. Reported net debt slid 21% y-o-y to Rs 21,300 crore. Cash and cash equivalents stood at Rs 37,900 crore. FY20 Ebitda/adjusted PAT stood at Rs 19,400/Rs 3,300 crore, down 16%/53% y-o-y. The effective tax rate in FY20 stood at 34% v/s 28% in FY19.