Despite posting a significant jump in net debt and lower than expected cash profit of $1.23bn (£0.98bn), the publication of Vedanta Resources ' (VED) half-year results caused shares in the commodities group to soar 12 per cent. That turbocharged bullishness should be seen in the immediate context of surging zinc and copper prices and broad hopes of a Trump-led US construction boom, but a closer look reveals a less than rosy picture.
Although credit rating agencies have upgraded Vedanta's debt this year, borrowings remain eye-wateringly high. Interest payments totalled $699m in the period, which leaves very little wriggle-room for a company with a huge asset base and an operating profit just $20m in advance of that obligation. The latter figure was buffeted by an improved bottom line in most of Vedanta's smaller metals divisions. While prices remained tepid, the heavy impairments booked in the same period last year meant the oil and gas, iron ore and copper segments all swung to a profit. Lower costs - down $536m in the last 18 months and on track to surpass a $1.3bn savings target before 2018 - have been the main contributor.