8 November 2020
2QFY21 Results Update | Sector: Metals
Vedanta
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
CMP: INR95
TP: INR104(+10%)
Neutral
Capital allocation holds key
VEDL IN
Inter-corporate loan to parent raises investor concerns
3,717
Vedanta (VEDL) reported better-than-expected 2QFY21 result with EBITDA
352.2 / 4.7
up 48% YoY to INR65.3b, the highest in 10 quarters. With LME prices
166 / 60
expected to stay strong, near-term earnings outlook is even better.
-37/-13/-44
2940
Investor concerns on capital allocation; however, are expected to override
49.9
the strong earnings outlook, leading to muted stock price performance.
Financials & Valuations (INR b)
Y/E MARCH
2020E 2021E 2022E
Sales
EBITDA
Adj. PAT
EBITDA Margin (%)
Cons. Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
Net D:E
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
Div. Yield (%)
FCF Yield (%)
*Attributable EBITDA
Shareholding pattern (%)
As On
Sep-20 Jun-20
Promoter
50.1
50.1
DII
16.3
19.1
FII
17.9
15.4
Others
15.7
15.4
FII Includes depository receipts
10.8
0.6
5.0
4.1
37.0
4.8
0.7
4.7
10.0
37.1
5.4
0.7
4.0
16.1
33.8
0.7
5.6
8.4
53.4
1.0
13.8
13.6
0.9
12.6
13.9
831.7 807.7 877.9
194.1 238.5 254.4
32.6
23.3
8.8
73.0
29.5
19.6
65.2
29.0
17.5
-10.7
-52.7
123.7
146.9 138.3 140.1
VEDL, through its overseas subsidiary CIHL, has advanced an inter-corporate
loan of USD956m to its parent Vedanta Resources (VRL) during Apr-Oct’20
(1QFY21 – USD307m, 2QFY21 – USD200m and Oct’20 – USD450m),
repayable gradually over the next three years. At the same time, VEDL has
passed on <50% of dividend received from subsidiary Hindustan Zinc (HZL).
Given lack of clarity on distribution of HZL’s dividend and capital allocation
concerns, we have raised Holdco discount for HZL to 30% (from 10%).
Moreover, high leverage and scheduled debt repayments at parent VRL
remains an additional overhang for VEDL. Maintain
Neutral.
58.1 104.6
Sep-19
50.1
18.6
17.5
13.8
Price recovery/cost deflation drives EBITDA to highest level in last 10 quarters
2QFY21 EBITDA rose 64% QoQ (48% YoY) to INR65.3b due to sharp recovery
in commodity prices and lower costs. Adj. PAT increased 143% QoQ to
INR25.1b. EBITDA (excl. HZL) improved 48% QoQ to INR35.8b.
HZL
had earlier reported EBITDA of INR29.5b, up 87% QoQ (39% YoY) driven
by higher metal volumes and prices (refer
note).
Aluminum
business’ EBITDA improved 28% QoQ to INR16.7b (v/s loss of
INR1.1b in 2QFY20) due to ~14% QoQ rise in LME Aluminum prices.
Aluminum hot-metal cost of production (CoP) remained low at USD1,288/t
(+2% QoQ) supported by lower coal and alumina cost.
The
Oil and Gas
(O&G) segment’s EBITDA increased 62% QoQ to INR7.9b
(down 56% YoY) due to sequential recovery in lower oil prices (+37% QoQ).
Net debt for 2QFY21 was flat QoQ to INR271.9b. Cash and cash equivalents
stood at INR338b. Net-debt (excl. HZL) increased by INR24b QoQ to INR450b
and would rise further in 3QFY21 due to dividend payments and inter-
corporate deposits (ICDs) to parent.
1HFY21 OCF/FCF stood at INR5.1b/INR2.1b, down 63%/76% YoY due to
increase in working capital as well as loan given to parent.
1HFY21 EBITDA/adj PAT stood at INR105.2b/35.4b, +9%/+288% YoY, due to
lower depreciation cost in oil & gas business on impaired asset value.
Highlights from management commentary
VEDL, through its overseas subsidiary CIHL, has advanced inter-corporate
loans of USD956m to its parent company during Apr-Oct’20 (1QFY21 –
USD307m, 2QFY21 – USD200m and Oct’20 – USD450m) repayable over the
next three years.
Amit Murarka - Research analyst
(Amit.Murarka@motilaloswal.com)
Basant Joshi - Research analyst
(Basant.Joshi@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Vedanta
Management has assured the company would not further advance Inter-
corporate loans and is confident of the parent company’s ability to repay debt
through a mixture of refinancing and non-core asset disposal.
Management expects 10-year extension of the profit-sharing contract (PSC) for
its O&G block RJ-ON-90/1 in Rajasthan to be on existing terms (i.e. at 40% profit
sharing). The government, however, is demanding an increase of 10% in the
profit sharing to 50% to grant an extension. The matter is under litigation and is
due for hearing on 11
th
Nov’20. Pending outcome of the litigation, the existing
PSC has been extended to 31
st
Jan’21.
Valuation and view
VEDL’s cost reduction in aluminum, higher volumes in zinc and O&G businesses
as well as higher commodity prices should drive earnings growth. Over FY20-
22E, we estimate CAGR of 14% in EBITDA and 41% in EPS.
Loan extension of USD956m to its parent group highlights the stretched balance
sheet of the promoter. The promoter entity VRL has scheduled repayments of
USD2.4b over Apr’20-Sep’21 (in addition to interest payment of ~USD700m).
VRL had net debt of USD7.3b at end-FY20.
Given lack of clarity on distribution of HZL’s dividend and capital allocation
concerns, we raise Holding Company discount for HZL to 30% (from 10%). We
value VEDL on SOTP basis to arrive at TP of INR104. Capital allocation decisions
would be watched closely. Maintain
Neutral.
Quarterly Performance (Consolidated)
Y/E March
Net Sales
Change (YoY %)
Total Expenditure
EBITDA
Change (YoY %)
As % of Net Sales
Finance cost
DD&A
Other Income
PBT (before EO item)
EO exp. (income)
PBT (after EO item)
Total Tax
% Tax
Reported PAT
Profit from Asso.
Minority interest
Adjusted PAT
Change (YoY %)
1Q
2,13,740
-3.7
1,61,760
51,980
-15.0
24.3
13,410
21,550
3,800
20,820
-4,190
25,010
5,570
22.3
19,440
0
5,930
7,811
-54.2
FY20
2Q
3Q
2,19,580 2,00,840
-3.3
-15.1
1,75,350 1,48,460
44,230 52,380
-15.1
-7.2
20.1
26.1
13,400 12,320
23,950 22,910
8,560
6,470
15,440 23,620
3,660 -13,850
11,780 37,470
-15,530 10,820
-131.8
28.9
27,310 26,650
-10
0
5,720
3,170
4,470 12,419
-59.3
-28.9
4Q
1Q
1,97,550 1,59,730
-15.8
-25.3
1,52,030 1,19,800
45,520 39,930
-25.8
-23.2
23.0
25.0
10,640 12,520
22,520 17,330
6,270 10,250
18,630 20,330
1,71,320
0
-1,52,690 20,330
-31,860
5,110
20.9
25.1
-1,20,830 15,220
0
0
4,380
4,890
7,916 10,330
-66.3
32.2
INR m
FY21
FY20
FY21
vs Est.
2Q
3QE
4QE
2QE
%
2,11,070 2,17,311 2,19,608 8,31,710 8,07,719 2,07,433
2
-3.9
8.2
11.2
-9.6
-2.9
-5.5
1,45,760 1,48,994 1,54,713 6,37,600 5,69,267 1,46,349
-0
65,310 68,317 64,896 1,94,110 2,38,452 61,083
7
47.7
30.4
42.6
-16.0
22.8
38.1
30.9
31.4
29.6
23.3
29.5
29.4
13,120 12,726 12,937 49,770 51,304 12,270
7
19,380 20,880 22,209 90,930 79,799 18,527
6,370
6,370
6,164 25,100 29,154
6,039
39,180 41,080 35,913 78,510 1,36,503 36,326
8
-950
0
0 1,56,940
-950
40,130 41,080 35,913 -78,430 1,37,453 36,326
10
5,890 14,378 12,689 -31,000 38,221 10,898
14.7
35.0
35.0
39.5
27.8
30.0
34,240 26,702 23,224 -47,430 99,232 25,428
35
0
0
0
-9
-3
0
8,200
5,450
6,785 19,200 25,325
6,468
25,090 21,253 16,439 32,617 72,954 18,959
32
461.2
71.1
107.7
-52.7
123.7
324.1
8 November 2020
2
 Motilal Oswal Financial Services
Vedanta
Exhibit 1: EBITDA, by business – INR m
Y/E March
EBITDA
Copper
Aluminum
Iron ore
Power
Zinc-India
Zinc-Int
Oil&Gas
Steel
Others
1Q
51,980
-609
1,790
1,140
3,920
24,770
1,280
18,250
1,970
-531
FY20
2Q
3Q
44,230 52,380
-1,019
-599
-1,140
7,960
2,010
2,140
4,190
3,790
21,170 22,890
2,070
1,060
18,170 14,850
180
1,070
-1,401
-781
4Q
45,520
-680
11,370
3,490
4,580
19,640
-610
8,690
2,680
-3,640
1Q
39,930
-630
13,050
1,850
4,000
15,760
660
4,910
1,010
-680
FY21
2Q
3QE
65,310 68,317
-110
-435
16,650 20,030
2,560
2,805
4,710
4,481
29,520 27,722
2,610
2,748
7,940
9,061
1,880
2,405
-450
-500
FY20
4QE
64,896
-435
15,838
3,226
4,815
28,291
2,543
9,185
2,303
-870
1,94,110
-2,908
19,980
8,780
16,480
88,470
3,800
59,960
5,900
-6,352
FY21
2QE
2,38,452 61,083
-1,611
-677
65,568 15,565
10,441
2,469
18,006
3,971
1,01,292 30,280
8,561
1,413
31,096
7,702
7,598
1,761
-2,500
-1,401
Source: MOFSL, Company
vs Est.
%
7
-84
7
4
19
-3
85
3
7
Exhibit 2: SOTP valuation
EBITDA
FY20 FY21E FY22E
VEDL (ex HZL)
Copper
-3
-2
Aluminum
20
66
Iron ore
9
10
Steel
6
8
Power(TSPL)
12
12
Power(other)
4
7
Zinc-Int
4
9
Oil&Gas
60
31
Sub. Tot.
112
140
Less: Net Debt
Equity Value
Hind. Zinc
HZL
88
101
Less: Net Debt
Equity Value
VEDL SOTP
HZL@64.9% (30% Hold co discount)
VEDL (ex HZL)
Equity value
Target price (INR/sh)
DPS
Yield
-2
47
8
8
12
5
10
39
127
EV
EV
EBITDA (x) FY22E Per Share
(INR b)
(INR)
5.0
5.0
5.0
DCF
5.0
5.0
2.5
4.1
233
40
42
81
24
50
97
567
592
-25
767
-140
907
INR b
412
-25
387
104
9.5
10.0
Metal
INR b
Volumes (kt/kbpd)
Prices (USD/t or bbl)
FY20 FY21E FY22E FY20E FY21E FY22E
78
76
100
1,922 1,903 1,921
6,300 5,760 4,500
1,178 1,200 1,200
5,862
1,750
56
513
6,164
1,724
75
463
6,550
1,750
56
487
Copper
63 Aluminum
11 Iron ore
11
Steel
22
6
14
Zinc
26 Oil-kbpd
152
159 USD/INR
-7
182
Zinc
-33
Lead
215
Silver (kg)*
111
-7
104
241
173
216
170
253
179
2,408
61
70.9
2,265
41
74.6
2,350
50
75.0
128
6.0
680
181
587
717
216
683
792
242
828
2,408
1,953
42
2,265
1,799
57
2,350
1,900
60
Source: MOFSL, * silver prices in INR ‘000 per kg
Other result highlight
HZL’s EBITDA
increased 87% QoQ to INR29.5b, led by higher silver volumes and
prices. Silver EBIT was the highest-ever at INR10.8b (+117% YoY; +103% QoQ),
contributing 46% to overall EBIT. Refined metal volumes also grew 12% YoY to
237kt – zinc by 181kt (+8% YoY) and lead by 57kt (+30% YoY). Reported CoP
declined USD34/t QoQ to USD919/t.
Zinc International
reported EBITDA of INR2.6b v/s INR660m in 1QFY21 due to
higher LME, volumes at (52kt, +44% YoY) and lower CoP (USD1,310/t, down 3%
QoQ).
Steel
EBITDA jumped 86% QoQ to INR1.9b due to 10% QoQ improvement in
realization. Though steel volumes declined 11% QoQ to 271kt, volume mix
3
8 November 2020
 Motilal Oswal Financial Services
Vedanta
improved with share of value-added products at 71% v/s 44% in 1QFY21.
Realization improved 10% QoQ to INR34,354/t driving 109% QoQ improvement
in EBITDA to INR6,937/t.
The
Power
segment reported EBITDA of INR4.7b, +18% QoQ. TSPL’s availability
stood at 81% (v/s 97% in 1QFY21). Power generation volumes stood at 3,998m
units (down 117% QoQ / 23% YoY).
Iron Ore
segment’s EBITDA increased 38% QoQ to INR2.6b, due to improved
pricing and higher volumes. Karnataka’s iron ore volumes stood at 1.3mt (v/s
0.4mt in 1QFY21). Pig iron volumes increased 69% to 182kt. Goa iron ore sales
declined 73% QoQ to 160kt.
Conference call takeaways
Zinc
Mined metal and finished metal production at HZL is guided to be in the range
of 925–950kt for FY21 (438kt in 1HFY21). However, HZL has guided to achieve a
run-rate of 1.2mtpa by end-FY21.
Saleable silver production guidance for FY21 is unchanged at 650t (320t in
1HFY21). Silver production was higher in 2QFY21 on account of higher lead
production and higher concentrate inventory.
FY21 growth capex is guided to range between USD100–140m.
CoP is likely to remain below USD1,000/t in FY21 (USD965/t in 1HFY21). CoP
should increase in 2HFY21 on account of higher mine development costs.
Zinc International:
Production at Gamsberg is guided at 150-160kt for FY21 with
CoP at USD1,200/t. CoP excl. Gamsberg is guided at USD1,300/t.
Aluminum
Hot Metal CoP increased 2% QoQ to USD1,288/t.
Management informed that the company has booked coal at lower cost till
Dec’20. However, increase in international alumina prices and other
commodities may lead to increased CoP in 2HFY21. It has guided for FY21 hot
metal CoP to range between USD1,300-1,350/t (v/s average of ~USD1,278/t in
1HFY21), thus, implying increased CoP by USD100/t in 2HFY21.
Alumina production at Lanjigarh increased by 13% YoY to 462kt. Captive alumina
CoP increased by 4% QoQ to USD227/t.
Oil & Gas
Operating cost at RJ Block stood at USD7.0/boe v/s USD6.9/boe in 1QFY21.
Management has guided for opex of USD7.5/boe for FY21, implying opex of
USD8.0/boe in 2HFY21.
The company expects incremental sales of 100mmscfd from 3QFY21. It further
expects completion of two projects in 3QFY21 – (a) Bhagyam and Aishwariya
Polymer project, and (b) ILiquid handling capacity increase at MPT by 30% to
1.4m barrels of fluid per day.
Management has deferred capex on various projects in the O&G segment and
would pursue only projects, which are near completion. Unspent capex at end-
1HFY21 in O&G segment stood at USD1.29b. The company has spent capex of
only USD86m in 1HFY21.
8 November 2020
4
 Motilal Oswal Financial Services
Vedanta
Management has guided for daily average gross volume of 170-180kboepd for
FY21 (v/s 161kboepd in 1HFY21) and expects to exit FY21 with daily average
production run-rate of 190-195kboepd.
The company received extension till 31
st
Jan’21 for signing Production Sharing
Contract for RJ Block. It expects to receive the extension of 10 years with
original terms of profit sharing i.e. 40%. However, we believe that profit sharing
as per new agreement would be at 50%.
One of the conditions for extension of Block relates to payment of amounts
arising out of certain audit exceptions. One of the audit exception raised for
FY16-17 requires the company to pay INR27.2b (VEDL’s share). However, the
company has disputed the same and the matter is under arbitration. No
provision has been created against the same.
Management has informed that the company has complied with its dividend
policy despite not entirely passing on HZL’s dividend. This is because the
dividend policy provides for deviation in case of calamity, sharp decline in
commodity prices, etc.
Management has assured that the company would not further advance Inter-
corporate loans and is confident of the Parent company’s ability to repay debt
through a mixture of refinancing and non-core asset disposal.
Guidance for FY21 growth capex is USD0.7b. Of this, USD0.2b has been spent in
1HFY21.
Other highlights
Exhibit 3: Aluminum – INR m
Aluminum (USD/t)
Alumina (USD/t)
USD/INR
Revenue
Production (kt) ex trial
Jharsuguda
Balco
Trial
Sales (kt) incl. trial
NSR (USD/t)
Premium over LME (%)
EBITDA
1Q
1,792
369
69.5
68,340
470
333
137
481
2,043
14.0
1,790
2Q
1,762
302
70.3
65,760
476
338
138
481
1,965
11.5
-1,140
3Q
1,752
282
71.2
67,890
483
342
141
487
1,976
12.8
7,960
4Q
1,694
285
72.5
63,780
474
329
145
473
1,856
9.6
11,370
1Q
1,493
240
75.9
60,430
468
331
137
479
1,701
13.9
13,050
2Q
1,702
260
74.5
63,950
472
331
141
469
1,819
6.9
16,650
3QE
1,850
280
74.0
73,392
483
342
141
483
2,053
11.0
20,030
4QE
FY20
FY21
1,850
1,750
1,724
300
310
270
74.0
70.9
74.6
73,050 2,65,770 2,70,821
480
1,903
1,903
338
1,342
1,342
142
561
561
472
2,057
11.2
15,838
1,922
1,903
1,971
1,908
12.6
10.7
19,980
65,568
Source: MOFSL
Exhibit 4: Oil & Gas segment – INR m
Y/E March
Brent crude - USD/bbl
Gross volumes - kbpd
Rajasthan
Ravva
Cambay
Working interest - kbpd
Raj. realn. - USD/bbl
Dis. to Brent - %
Revenue - INR m
EBITDA - INR m
1Q
68.4
180
149.2
13.5
17.4
114.6
66.7
2.5
31,310
18,250
FY20
2Q
62.0
179
150.4
12.5
15.8
115.0
61.1
1.5
31,960
18,170
3Q
63.1
172
145.1
13.4
13.8
110.7
57.2
9.4
26,540
14,850
4Q
50.1
161
132.3
17.6
11.0
101.6
48.8
2.6
24,040
8,690
1Q
31.4
159
127.9
22.0
8.8
98.5
29.6
5.7
13,890
4,910
FY21
2Q
43.0
165
132.3
21.6
11.1
102.4
41.9
2.6
16,660
7,940
FY20
3QE
43.0
172
139.0
21.8
11.1
107.1
41.3
4.0
19,552
9,061
4QE
45.0
184
151.2
21.7
11.5
115.8
43.2
4.0
20,385
9,185
FY21
60.9
40.6
173
170
144.7
137.6
14.0
21.9
14.5
10.6
110.2
105.5
58.5
38.9
4.0
4.1
1,13,850
70,487
59,960
31,096
Source: MOFSL
8 November 2020
5
 Motilal Oswal Financial Services
Vedanta
Exhibit 5: Iron Ore segment – INR m
Sales Qty ('000 dmt)
Goa
Karnataka
Pig iron
Net Sales
EBITDA
1QFY20
1,200
1,200
172
7,970
1,140
2QFY20
1,400
1,400
159
7,570
2,010
3QFY20
1,500
1,500
176
8,360
2,140
4QFY20
2,200
600
1,600
159
10,730
3,490
1QFY21
1,000
600
400
108
6,390
1,850
2QFY21
1,490
160
1,330
182
8,780
2,560
3QFY21
1,500
200
1,300
180
8,461
2,805
4QFY21
1,770
300
1,470
180
8,920
3,226
FY20
FY21
6,300
5,760
600
1,260
5,700
4,500
666
650
34,630 32,550
8,780 10,441
Source: MOFSL
Exhibit 6: Power segment – INR m
Sales (m kwh)
S/A Jha. 600 MW (Jharsuguda)
Subs
Balco 600MW
MALCO
HZL Wind Power
TSPL
TSPL PAF (%)
Revenue
Standalone
(INR/kwh)
EBITDA
Standalone
(INR/kwh)
Subs
1QFY20
3,523
267
3,256
425
0
134
2,697
17,030
600
2.2
3,920
-537
-2.0
4,457
2QFY20
3,254
20
3,234
454
0
165
2,615
92
16,460
30
1.5
4,190
-297
-14.9
4,487
3QFY20
2,282
7
2,275
387
0
68
1,820
94
13,070
0
0.0
3,790
-377
-53.9
4,167
4QFY20
2,107
482
1,625
460
0
71
1,094
85
12,040
1,430
3.0
4,580
113
0.2
4,467
1QFY21
1,843
685
1,158
403
112
643
85
10,180
1,750
2.6
4,000
186
0.3
3,814
2QFY21
3,998
807
3,191
418
107
2,666
81
18,600
2,100
2.6
4,710
236
0.3
4,474
3QFY21
3,621
800
2,821
387
68
2,366
81
17,668
2,000
2.5
4,481
240
0.3
4,241
4QFY21
3,633
708
2,925
442
63
2,420
81
17,120
1,650
2.5
4,815
238
0.3
4,577
FY20
11,163
776
10,387
1,726
0
438
8,223
91
58,600
2,060
2.7
16,480
-1,099
17,579
FY21
13,095
3,000
10,095
1,650
0
350
8,095
85
63,568
7,500
2.5
18,006
900
0.3
17,106
Source: MOFSL
Exhibit 7: Zinc India segment – INR m
Y/E March
1Q
Sales
Zinc refined (kt)
Lead refined (kt)
Silver (tonnes)
Zinc LME (USD/t)
Net Sales
Change (YoY %)
EBITDA
Change (YoY %)
As % of Net Sales
168
48
155
2,761
49,870
-6.1
24,770
-8.7
49.7
FY20
2Q
168
44
135
2,347
45,110
-5.6
21,170
-9.3
46.9
3Q
172
42
153
2,392
46,720
-15.7
22,890
-19.3
49.0
4Q
173
48
144
2,131
43,910
-20.0
19,640
-29.6
44.7
1Q
163
45
146
1,968
39,890
-20.0
15,760
-36.4
39.5
FY21
2Q
181
57
203
2,340
56,600
25.5
29,520
39.4
52.2
FY20
3QE
184
56
164
2,400
54,834
17.4
27,722
21.1
50.6
4QE
190
58
170
2,350
56,160
27.9
28,291
44.0
50.4
680
181
587
2,408
1,85,610
-12.1
88,470
-17.1
47.7
717
216
683
2,265
2,07,484
11.8
1,01,292
14.5
48.8
FY21
Source: MOFSL
8 November 2020
6
 Motilal Oswal Financial Services
Vedanta
Financials and Valuations
Income Statement
Y/E March
Net Sales
Total Expenses
EBITDA
As % of Net Sales
EBITDA attribute
DDA
EBIT
Finance cost
Other income
PBT
Tax
Rate (%)
PAT
EO expense (Income)
PAT (after EO)
Minority interests
Share in Asso.
Attrib. PAT (after MI & asso)
Change (YoY %)
Balance Sheet (Consolidated)
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liability
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Investments
WC. Assets
Inventory
Account Receivables
Cash and Bank Balance
Loans and advances
WC. Liability & Prov.
Trade payables
Provisions & Others
Net WC. Assets
Appl. of Funds
FY16
6,42,618
4,91,102
1,51,516
23.6
1,29,080
85,724
65,791
57,781
44,436
52,446
-1,06,776
-203.6
1,59,221
3,37,847
-1,78,626
-55,919
2
2,15,143
261.6
FY17
7,22,250
5,08,931
2,13,319
29.5
1,75,512
62,915
1,50,404
58,550
45,806
1,37,660
37,783
27.4
99,877
1,144
98,733
43,584
-27
56,266
-73.8
FY18
9,18,660
6,67,020
2,51,640
27.4
2,03,274
62,830
1,88,810
57,830
35,740
1,66,720
57,430
34.4
1,09,290
-8,230
1,17,520
33,500
0
75,790
34.7
FY19
9,20,480
6,89,450
2,31,030
25.1
1,89,064
81,920
1,49,110
56,890
40,180
1,32,400
38,620
29.2
93,780
-3,200
96,980
26,330
0
68,998
-9.0
FY20
8,31,710
6,37,600
1,94,110
23.3
1,59,848
90,930
1,03,180
49,770
25,100
78,510
-31,000
-39.5
1,09,510
1,56,940
-47,430
19,200
-9
32,617
-52.7
FY21E
8,07,719
5,69,267
2,38,452
29.5
1,93,032
79,799
1,58,653
51,304
29,154
1,36,503
38,221
28.0
98,282
-950.0
99,232
25,325
-3
72,954
123.7
INR m
FY22E
8,77,909
6,23,464
2,54,446
29.0
2,02,575
85,828
1,68,618
49,251
18,875
1,38,241
41,472
30.0
96,769
96,769
31,593
-4
65,172
-10.7
INR m
FY22E
3,720
5,17,464
5,21,184
1,71,981
6,88,592
-29,033
13,52,725
23,82,674
14,41,387
9,41,287
1,38,783
943
6,20,251
1,20,262
60,131
2,35,798
2,04,060
3,48,539
96,209
2,52,330
2,71,711
13,52,725
FY16
2,965
4,37,427
4,40,392
3,65,611
8,12,934
-52,679
15,66,258
15,06,034
7,28,375
7,77,659
2,79,260
488
8,09,719
80,117
25,279
5,70,460
1,33,864
3,00,867
62,124
2,38,743
5,08,852
15,66,258
FY17
3,718
6,01,284
6,05,001
1,39,279
9,06,308
-54,084
15,96,505
16,41,342
7,74,935
8,66,407
1,76,709
729
8,71,531
96,279
34,093
6,10,119
1,31,040
3,18,871
71,288
2,47,583
5,52,660
15,96,505
FY18
3,720
6,31,360
6,35,080
1,59,570
7,25,200
-8,560
15,11,290
18,09,670
8,47,730
9,61,940
1,61,400
1,640
6,73,660
1,19,670
53,160
3,37,520
1,63,310
2,87,350
84,260
2,03,090
3,86,310
15,11,290
FY19
3,720
6,19,250
6,22,970
1,52,270
8,35,360
10,090
16,20,690
21,76,030
11,84,830
9,91,200
2,22,360
48,910
7,23,210
1,31,980
76,700
3,65,430
1,49,100
3,64,990
92,360
2,72,630
3,58,220
16,20,690
FY20
3,720
5,42,630
5,46,350
1,71,120
7,47,233
-40,040
14,24,663
21,82,280
12,75,760
9,06,520
1,68,370
950
6,91,490
1,13,350
58,080
3,71,600
1,48,460
3,42,667
90,337
2,52,330
3,48,823
14,24,663
FY21E
3,720
5,10,576
5,14,296
1,40,389
7,18,592
-35,945
13,37,332
22,73,839
13,55,559
9,18,280
1,53,743
947
6,05,209
1,10,646
55,323
2,20,380
2,18,860
3,40,847
88,517
2,52,330
2,64,362
13,37,332
8 November 2020
7
 Motilal Oswal Financial Services
Vedanta
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV (incl.-goodwill)
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
EBITDA Margins
Net Profit Margins
RoE
RoCE (pre-tax)
RoIC (pre-tax)
Working Capital Ratios
Fixed Asset Turnover (x)
Receivable (Days)
Inventory (Days)
Trade payable (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/EBITDA
Net Debt/Equity
Cash Flow Statement
EBITDA
Non cash exp. (income)
(Inc)/Dec in Wkg. Cap.
Tax paid
CF from Op. Activity
(Inc)/Dec in FA + CWIP
Free Cash Flow
(Pur)/Sale of Investments
Interest & Dividend Income
Investment in subsidiaries
Others
CF from Inv. Activity
Equity raised/(repaid)
Debt raised/(repaid)
Dividend (incl. tax)
Interest paid
Others
CF from Fin. Activity
(Inc)/Dec in Cash
Add: Opening Balance
adjustments
Closing Balance
FY16
1,51,516
-254
39,820
-24,513
1,66,568
-54,975
1,11,593
19,262
10,547
1
-25,165
0
12,278
-32,218
-57,966
1,380
-76,526
64,878
5,05,582
5,70,460
FY17
2,13,319
1,559
-7,404
-20,438
1,87,036
-55,010
1,32,026
26,986
11,451
-30,138
-46,712
-1,010
91,499
-1,29,355
-61,501
-299
-1,00,665
39,660
5,70,460
6,10,119
FY18
2,51,640
7,460
-29,842
-31,980
1,97,278
-73,670
1,23,608
13,561
14,150
-8,590
-54,549
-2,020
-1,89,598
-1,68,120
-56,770
1,180
-4,15,328
-2,72,599
6,10,119
3,37,520
FY19
2,31,030
11,360
-8,210
-26,130
2,08,050
-88,720
1,19,330
41,920
9,140
-68,910
-1,06,570
-1,440
1,06,480
-1,17,920
-60,090
-600
-73,570
27,910
3,37,520
3,65,430
FY20
1,94,110
19,610
5,377
-11,350
2,07,747
-77,060
1,30,687
42,230
8,480
-4,680
-31,030
-1,070
-1,01,507
-14,440
-53,220
-310
-1,70,547
6,170
3,65,430
3,71,600
FY21E
2,38,452
3,640
-34,126
2,07,967
-76,932
1,31,035
29,154
-70,400
-1,18,178
-30,000
-1,59,705
-51,304
-2,41,009
-1,51,220
3,71,600
2,20,380
FY16
72.6
101.5
148.5
5.9
9.7
FY17
15.1
32.1
162.7
19.5
154.2
FY18
20.4
37.3
170.7
21.2
124.9
FY19
18.5
40.6
167.5
18.9
122.0
5.1
2.3
0.6
1.0
4.7
19.8
23.6
33.5
41.9
6.3
5.5
0.7
14
46
35
2.7
1.9
1.6
0.6
29.5
7.8
9.7
12.4
15.2
0.9
17
49
36
2.7
3.4
1.4
0.5
27.4
8.3
12.2
14.5
17.5
1.0
21
48
33
2.3
3.9
1.5
0.6
25.1
7.5
11.0
12.1
12.3
0.9
30
52
37
2.0
3.3
2.0
0.8
FY20
8.8
33.2
146.9
3.9
53.4
10.8
2.9
0.6
1.0
5.0
4.1
23.3
3.9
5.6
8.4
8.9
0.9
25
50
40
2.0
2.6
1.9
0.7
FY21E
19.6
41.1
138.3
9.5
58.1
4.8
2.3
0.7
1.1
4.7
10.0
29.5
9.0
13.8
13.6
14.6
0.9
25
50
40
1.8
3.7
2.1
1.0
FY22E
17.5
40.6
140.1
15.3
104.6
5.4
2.3
0.7
0.9
4.0
16.1
29.0
7.4
12.6
13.9
15.1
0.9
25
50
40
1.8
3.8
1.8
0.9
INR m
FY22E
2,54,446
-6,731
-34,560
2,13,155
-93,875
1,19,280
18,875
14,800
-60,200
-30,000
-58,284
-49,251
-1,37,536
15,419
2,20,380
2,35,798
8 November 2020
8
 Motilal Oswal Financial Services
Vedanta
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
8 November 2020
9
 Motilal Oswal Financial Services
Vedanta
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
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may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
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report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
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The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
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informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
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document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
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all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
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The person accessing this information specifically agrees to exempt MOFSL or any of its
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misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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