Vedanta cheers markets with surprise profit, scrip up 5.64%

Vedanta on Thursday posted a steep 98.9 per cent fall in its consolidated net profit at Rs 17.91 crore for the December quarter as the metals major battled a subdued commodities market, which saw prices hit over 10-year lows.

The firm led by NRI billionaire Anil Agarwal had reported a net profit of Rs 1,587.50 crore in the year-ago period. The record decline in crude and metal prices impacted the mining and metal conglomerate's total income, which fell 22.6 per cent to Rs 14, 876.55 crore in October-December of 2015-16, from Rs 19,218.90 crore during the same quarter in 2014-15.

However, markets cheered its cost optimisation efforts, which helped Vedanta post an unexpected profit at a time when metals and oil companies globally have seen their sales and profits dry up due to high production and subdued demand. Vedanta stock rose 5.64 per cent to close at Rs 67.40 on NSE while they settled at Rs 67.25 on BSE, up 5.34 per cent from their previous closing. Analysts attributed the better-than-expected performance to its cost reduction drive in the wake of price crashes in the metals and crude market amid a subdued demand.

Vedanta CEO Tom Albanese said the commodities market is passing through "very challenging times" with a steep drop of 60 per cent in crude prices, 40 per cent in iron ore, 28 per cent in zinc, 21 per cent in copper, 18 per cent in silver as well as aluminium and 8 per cent in lead. 

"Under such conditions, we did well. The cost reduction programme gained momentum and I believe that this relentless focus on efficiency will not only make our business more resilient through the cycle, but position us favourably for any future improvement in market conditions," he said.

Vedanta's total expenses fell 12 per cent to Rs 13,541.18 crore, from Rs 15,400.27 crore during the reported quarter.