Expenses outpace revenue as Vedanta Aluminium margin narrows
The consolidated operating margin fell 2.84 percentage points QoQ, while lower interest and tax costs only partly offset the pressure on profit.
Filed 28 Oct 2026, 15:18 IST · Vedanta Aluminium Metal Ltd (VAML)
Key takeaways
- Consolidated net profit declined -6.21% QoQ as expenses grew +10.06%, ahead of revenue growth of +4.35%.
- Operating margin narrowed 2.84 percentage points QoQ to 45.30%, though it remained 30.72 percentage points above the 14.58% median for 32 reporting commodities peers.
- Other income was -Rs 137.76 cr, equal to -1.67% of pre-tax profit, so reported earnings received no boost from non-operating income.
Price around the results
Q2 profit fell despite higher revenue
Vedanta Aluminium's consolidated revenue rose +4.35% QoQ, but operating profit declined -1.80% and net profit fell -6.21% to Rs 6,187.49 cr. The squeeze came as expenses increased +10.06%, more than twice the pace of revenue growth. Lower interest expense, down -9.02%, and a 0.19 percentage-point reduction in the tax rate partly cushioned the decline.
Cost growth drove the margin contraction
Operating margin narrowed 2.84 percentage points QoQ to 45.30% because expenses grew faster than revenue. Other income turned negative at -Rs 137.76 cr and represented -1.67% of pre-tax profit, making earnings quality weaker rather than providing support. The company said the war could add $50-$100 per tonne to hot-metal costs in H1 FY27.
Margin remains well above the commodities peer median
The 45.30% operating margin was 30.72 percentage points above the 14.58% median among 32 commodities peers that had reported the quarter. The available quarter-on-quarter comparison shows margin moving down from 48.14%, alongside a decline in pre-tax profit of -6.45% and EPS of -8.20%.
Management outlined production and expansion milestones
Management guided to alumina production of 4.0-4.1 MnT and aluminium production of 2.6-2.7 MnT, including trial-run output, with hot-metal cost of production guided at $1,650-$1,700 per tonne. It said Lanjigarh was targeting alumina production above 1,000 KT in Q3 FY27 and that the refinery expansion from 2 to 5 MTPA had approved capex of Rs 6,585 cr. Management also said BALCO had begun commissioning its 435 KTPA smelter expansion.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹22,324 cr | ₹21,393 cr | +4.35% |
| Other income | ₹-138 cr | ₹309 cr | — |
| Expenses | ₹12,211 cr | ₹11,094 cr | +10.06% |
| Operating profit | ₹10,113 cr | ₹10,299 cr | -1.80% |
| Operating margin (%) | 45.30% | 48.14% | — |
| Interest | ₹911 cr | ₹1,001 cr | -9.02% |
| Depreciation | ₹802 cr | ₹775 cr | +3.57% |
| Profit before tax | ₹8,262 cr | ₹8,832 cr | -6.45% |
| Tax | ₹2,075 cr | ₹2,235 cr | -7.16% |
| Net profit | ₹6,187 cr | ₹6,597 cr | -6.21% |
| EPS (₹) | ₹13.21 | ₹14.39 | -8.20% |
Operating margin of 45.30% compares with a Commodities sector median of 14.58% across 32 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company guides to alumina production of 4.0–4.1 MnT.
- The company guides to aluminium production of 2.6–2.7 MnT, including trial-run production.
- The company guides to hot metal cost of production of $1,650–$1,700 per tonne.
- Lanjigarh is targeting alumina production above 1,000 KT in Q3 FY27.
- The company is targeting a domestic bauxite mix above 90% by the end of the year.
Expansion
- The Lanjigarh refinery expansion from 2 to 5 MTPA has approved capex of ₹6,585 crore.
- BALCO has initiated commissioning of its 435 KTPA smelter expansion.
- The Sijimali Bauxite Mine is targeted for commissioning in H2 FY27.
- The Kuraloi Coal Mine is targeted for commissioning in Q3 FY27.
- The Ghogharpalli Coal Mine is targeted for commissioning in H2 FY27.
New products
- The company describes Restora as India’s first low-carbon portfolio.
New initiatives
- The company has renewable power delivery agreements of approximately 1.3 GW.
Problems & risks
- The company expects an additional hot-metal cost impact of $50–$100 per tonne due to the war in H1 FY27.
- Chemical exposure control deteriorated sequentially.
What to watch
- Whether operating margin holds above 45.30% after the 2.84 percentage-point QoQ decline.
- Whether expenses continue to grow faster than revenue after rising +10.06% versus revenue growth of +4.35%.
- Progress against management's target of above 1,000 KT of Lanjigarh alumina production in Q3 FY27.