Financials

Figures converted from INR at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged.

Financials in One Page

Vedanta is a large, cyclical, capital-intensive natural resources group: FY2026 revenue was $18.6B, up 15%, with record EBITDA of $6.0B and reported EBITDA margin of 39% because aluminium and Zinc India got price, volume, and cost support. Free cash flow is real but not fully discretionary: operating cash flow stayed strong, yet growth capex of $1.6B and dividends of $0.36/share mean cash generation is being shared between demerger-era reinvestment and income distribution. Balance-sheet risk improved to 0.95x net debt/EBITDA with $5.7B net debt, but the valuation needs a demerger discount: current market pricing no longer maps cleanly to the pre-demerger consolidated financials. The metric that matters most now is net debt/EBITDA after the separated companies begin reporting, because it tests whether the new structure preserves the cash-flow resilience shown in FY2026.

Quality Score, Fair Value, Piotroski F-Score, Altman Z-Score, and Beneish M-Score were unavailable in the local rankings feed. That absence matters: the financial judgment here comes from first-principles statement tests rather than a third-party score. Free cash flow means cash generated after operating needs and capital expenditures; EBITDA means earnings before interest, tax, depreciation, and amortization, a common operating cash-profit proxy for capital-intensive companies.

Revenue, Margins, and Earnings Power

Vedanta is not a smooth compounder; it is a commodity spread business. Revenue is driven by volumes, metal and oil prices, premiums, currency, and the mix between aluminium, Zinc India, oil and gas, power, copper, steel, and iron ore. The investor question is whether the FY2026 profit step-up is a new base or a cyclical high helped by favourable prices and demerger accounting.

The long view shows why Vedanta needs a through-cycle lens. Revenue nearly doubled from FY2021 to FY2026, but operating profit did not move in a straight line; FY2023 and FY2024 show how quickly costs, commodity prices, finance cost, and taxes can absorb revenue growth. FY2026 is the best recent earnings print, but it remains high-cycle evidence until the new entities prove durability.

No consistent gross-profit series is available, so the margin test uses operating margin and net margin. The spread between the two lines is the cost of leverage, depreciation, tax, and non-operating items. FY2026 reported EBITDA margin reached 39%, but net margin was closer to 14%, which is the cleaner reminder that this is still a leveraged, depreciating asset base rather than a pure high-margin business.

The recent trajectory is genuinely strong: Q4 FY2026 was the best reported quarter, with revenue up 29% year over year and EBITDA up 59%. The drivers were higher LME prices, premiums, volumes, forex gains, and lower finance cost, which makes the improvement economically meaningful but still sensitive to external price variables.

Cash Flow and Earnings Quality

Earnings quality asks whether accounting profit becomes cash the company can actually use. For Vedanta, the answer is mixed but improving: operating cash flow is strong, free cash flow is positive, and working capital can help, but the growth program and dividend policy absorb a large portion of that cash.

The cash-flow evidence is better than the income statement alone suggests. In FY2026, free cash flow was about 75% of PAT, while operating cash flow was roughly 157% of PAT. That is strong conversion for a miner, but free cash flow fell versus FY2025 as capex and investment needs rose, so the cash story is not simply record earnings equals record surplus cash.

Free cash flow margin has been positive in every year shown, which is important for a capital-intensive company. The caveat is that conversion can look unusually good when profits are depressed or working capital reverses; in Vedanta’s case, the better underwriting metric is sustained post-capex FCF after the growth projects and dividend commitments are funded.

Balance Sheet and Financial Resilience

Financial resilience is what the balance sheet lets Vedanta do during a commodity downturn. Net debt is debt after cash; net debt/EBITDA compares that debt to annual operating cash profit. For a diversified miner with high capex and dividends, this ratio matters more than headline EPS.

The debt trend has not been benign: debt rose materially into FY2024 and FY2025 before the FY2026 presentation showed a better net-debt position. The normalized balance-sheet feed lacks a full historical cash series, so the latest official cash and net-debt bridge is more useful than trying to infer liquidity from total debt alone.

The latest leverage print is the strongest balance-sheet argument for the stock: net debt/EBITDA improved to 0.95x in Q4 FY2026 from 1.22x a year earlier, helped by record EBITDA and cash generation. The risk is not immediate solvency; the risk is whether separated entities inherit debt in line with their cash-flow volatility, especially power and residual businesses.

Returns, Reinvestment, and Capital Allocation

Returns on capital answer whether management is creating value with the asset base, not just growing tonnage. ROCE means return on capital employed: operating profit divided by debt plus equity capital employed. A miner can report high earnings in a good commodity year and still destroy value if growth capex earns poor through-cycle returns.

The return profile is respectable but not unambiguously great. ROCE peaked at 28% in FY2022, recovered to 25% in FY2025, then fell to the mid-teens in FY2026 despite record EBITDA. That tells you the business has valuable assets, but the underwriting case depends on reinvestment discipline and segment-level returns, not simply on consolidated growth.

Capital allocation is doing three things at once: funding growth projects, reducing leverage, and paying a high dividend. FY2026 growth capex was large, and FY2027e capex guidance is higher again. That is acceptable only if aluminium integration, Zinc International ramp-up, power additions, and copper margin recovery produce cash returns above the cost of capital.

Segment and Unit Economics

Segment detail is available from the FY2026 presentation, and it changes the read completely. Vedanta is not one average miner: aluminium and Zinc India carry most of the economics, while copper and steel add revenue with little or negative EBITDA.

Aluminium and Zinc India together account for roughly 85% of reported segment EBITDA in the available segment bridge. That concentration is good when aluminium integration and zinc/silver prices are favourable, but it means group financial quality is heavily tied to two commodity profit pools.

Copper is the warning label: it produced large FY2026 revenue but negative EBITDA in the segment table. The company is guiding for margin improvement, but until that appears in reported segment profit, copper is optional upside rather than a current quality contributor.

Valuation and Market Expectations

Valuation is the hardest section because the May 2026 demerger changed what the listed VEDL line represents. EV/EBITDA is the right starting metric for a leveraged, capital-intensive commodity producer, but any current multiple using FY2026 consolidated financials is only an indicative bridge until the separated companies publish standalone accounts and trade independently.

On a pre-demerger consolidated sense-check, Vedanta screens inexpensive: market cap / FY2026 PAT is about 5.0x and EV / FY2026 EBITDA is about 3.2x. The discount is not irrational. The haircut is for record-cycle margins, governance and parent-company cash-transfer concerns, capex intensity, and uncertainty around how the demerged entities will be valued.

This scenario range is a sanity check, not a forecast. At 2.5x FY2026 EBITDA, the debt-adjusted equity value is below the current price; at 3.5x to 4.5x, there is support if FY2026 EBITDA proves repeatable. The real market expectation is narrower: aluminium cost reduction, Zinc India margins, and post-demerger debt allocation must all hold up at the same time.

Peer Financial Comparison

The peer set is imperfect because Vedanta is a portfolio of aluminium, zinc, oil and gas, power, copper, steel, and iron ore. The useful comparison is not one product line; it is whether Vedanta’s discount compensates for leverage, complexity, and cyclicality versus cleaner segment peers.

Vedanta’s peer gap is clear: it screens cheaper than Hindalco and Tata Steel on EV/EBITDA, and cheaper than most peers on P/E, but the discount is deserved unless investors are comfortable with demerger complexity, parent-level cash needs, and the fact that the best economics are concentrated in aluminium and Zinc India. The upside case is a narrowing discount if the separated entities show transparent balance sheets and sustain FY2026 margins.

What to Watch in the Financials

The financials confirm that Vedanta can generate real cash and very strong earnings when aluminium, zinc, and operating execution line up. They contradict a simplistic high-yield value story because the company still has heavy capex, large absolute debt, non-operating income, and demerger-related uncertainty. The first number to watch next quarter is not EPS; it is whether post-demerger leverage stays near the FY2026 exit rate while segment EBITDA normalizes.

The first financial metric to watch is… post-demerger net debt / EBITDA by entity.