Like many of its peers, Vedanta Resources (VED) returned to a reported profit in the year to March thanks in large part to higher commodity prices. A step up in zinc, lead and silver prices were especially helpful, contributing $478m (£368m) to operating profit, while depreciation and amortisation charges halved compared with 2016's horror show.
However, for a company "committed to a consistent strategy and delevering the balance sheet", headline numbers weren't uniformly positive. By March, net debt had crept up by $1.2bn to $8.5bn due to a massive $1.4bn dividend paid to non-controlling interests. And although $1.4bn in gross borrowings has been retired since the period end, free cash flows look a little tight.
There was no mention of Anglo American (AAL), in which chairman Anil Agarwal acquired a 13 per cent stake in a high-profile deal in March. However, Mr Agarwal has hinted in interviews that he may use his holding to agitate for Anglo to invest in India's diamond and fertilizer industries. Given the state of Vedanta's balance sheet, persuading peers to cough up for capital-intensive projects may be the easier course of action.
According to Bloomberg consensus figures, analysts expect adjusted pre-tax profit of $2.5bn and EPS of $1.44 in the year to March 2018, against $1.54bn and 58.4¢ in 2017.
VEDANTA RESOURCES (VED) | ||||
|---|---|---|---|---|
| ORD PRICE: | 629p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 628-629p | 12-MONTH HIGH: | 1,112p | LOW: 361p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | nil | |
| NET ASSET VALUE: | 2,226¢ | NET DEBT: | 141% | |
| Year to 31 Mar | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 14.60 | 1.70 | 59.0 | 58 |
| 2014 | 12.90 | 1.10 | -72.0 | 61 |
| 2015 | 12.88 | -5.64 | -655 | 63 |
| 2016 | 10.74 | -4.98 | -666 | 30 |
| 2017 | 11.52 | 1.38 | -8.2 | 55 |
| % change | +7 | - | - | +83 |
Ex-div: 20 Jul Payment: 23 Aug £1=$1.30 | ||||
