Vedanta misses quarterly profit estimates on weak aluminium prices

Indian metals-to-oil conglomerate Vedanta missed quarterly profit estimates on Thursday, as lower aluminium and copper prices and higher tax expenses overshadowed the impact of strong local demand.

Vedanta's aluminium business is the biggest in India and contributes to nearly 40 per cent of the company's revenue. Zinc is the second-biggest business, followed by copper.

The benchmark three-month aluminium and copper dropped 4 per cent and 4.1 per cent on-year, during the reporting quarter, pressured by geopolitical tensions and uncertainty around US trade policies.

Lower commodity prices tend to hit selling prices and margins for mining companies.

Vedanta's overall revenue increased by 6.2 per cent year-on-year to 374.34 billion rupees ($4.3 billion) in the quarter ended June 30, driven by higher revenue from aluminium and copper, which grew 7.7 per cent and 34.6 per cent, respectively.

The company's consolidated net profit declined to 31.85 billion rupees from 36.06 billion rupees a year ago.

Analysts, on an average, expected a profit of 34.83 billion rupees, per data compiled by LSEG.

Its earnings before interest, taxes, depreciation and amortization rose about 2 per cent to 60.53 billion rupees while tax expenses jumped to 15.96 billion rupees from 8.31 billion rupees a year ago.

Vedanta's operating profit margin remained flat at 21 per cent.

Earlier this month, Vedanta's subsidiary Hindustan Zinc posted a bigger-than-expected first-quarter profit, as strong demand for the metal helped cushion the impact of prices.