Vedanta margin widens as costs grow slower than revenue
The consolidated margin rose 2.50 percentage points QoQ, while lower interest and tax rates supported a 78.27% YoY rise in net profit.
Filed 28 Oct 2026, 14:08 IST · Vedanta Ltd (VEDL)
Key takeaways
- Consolidated operating margin widened 2.50 percentage points QoQ to 37.62% as revenue grew faster than expenses.
- Year-on-year net profit rose 78.27% despite revenue falling 33.89%, helped by 67.01% lower interest and a 3.59-percentage-point lower tax rate.
- Vedanta’s operating margin was 23.04 percentage points above the 14.58% median for 32 reported Commodities peers.
Price around the results
Revenue momentum lifted the consolidated margin
Consolidated revenue grew 8.89% QoQ, while expenses increased 4.69%, lifting operating margin by 2.50 percentage points to 37.62%. The YoY comparison is weaker on revenue, which fell 33.89%, but expenses fell faster at 42.25%, widening margin by 9.03 percentage points. Vedanta’s margin was 23.04 percentage points above the 14.58% median among 32 Commodities peers that have reported.
Lower interest and tax rates aided profit growth
Year-on-year interest expense fell 67.01% and the tax rate declined 3.59 percentage points, helping profit before tax rise 69.60% and net profit rise 78.27%. Other income contributed 6.08% of profit before tax, so it was not the main driver of the reported profit increase. Operating margin has risen in each of the past five QoQ steps, from 26.22% in Q1FY26 to 37.62% in Q2FY27.
Production records and expansion shaped the operating update
Management said Zinc India delivered record Q2 mined-metal production of 271 kt, up 5% YoY, while FACOR posted record Q2 ore production of 50 kt and ferrochrome production of 24 kt. The company said Gamsberg Phase II added 200 KTPA of capacity, taking Zinc International’s total capacity to 500 KTPA, with the concentrator operating under stabilisation parameters. Management also said Copper International targets a quarterly run rate above 20 kt by Q3FY27, while its 155 KTPA KSA rod plant is expected to be commissioned in Q3FY27; it attributed lower Copper International sales to Strait of Hormuz-related supply disruption and regional geopolitical tensions.
Capital spending continued across the portfolio
Management said Vedanta invested Rs 1,135 cr during the quarter in growth projects, capacity expansion, mine development and resource-security initiatives. The company said FACOR’s 330 KTPA smelter is expected to operate in H2FY28, adding to the longer-dated expansion pipeline. These projects sit alongside the newly commissioned Gamsberg Phase II capacity and the planned KSA rod plant.
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 | YoY |
|---|---|---|---|---|
| Revenue | ₹26,356 cr | ₹24,205 cr | +8.89% | -33.89% |
| Other income | ₹510 cr | ₹542 cr | -5.90% | — |
| Expenses | ₹16,441 cr | ₹15,704 cr | +4.69% | -42.25% |
| Operating profit | ₹9,915 cr | ₹8,501 cr | +16.63% | -13.00% |
| Operating margin (%) | 37.62% | 35.12% | — | — |
| Interest | ₹696 cr | ₹662 cr | +5.14% | -67.01% |
| Depreciation | ₹1,339 cr | ₹1,192 cr | +12.33% | -53.31% |
| Profit before tax | ₹8,390 cr | ₹7,189 cr | +16.71% | +69.60% |
| Tax | ₹2,188 cr | ₹1,895 cr | +15.46% | +49.05% |
| Net profit | ₹6,202 cr | ₹7,918 cr | -21.67% | +78.27% |
| EPS (₹) | ₹9.35 | ₹14.02 | -33.31% | +102.82% |
Operating margin of 37.62% 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.
This quarter
- Zinc India achieved record Q2 mined-metal production of 271 kt, up 5% year on year.
- FACOR achieved record Q2 ore production of 50 kt and ferrochrome production of 24 kt.
- The Gamsberg Phase II concentrator was commissioned and is operating under stabilization parameters.
Guidance & outlook
- Copper International targets a quarterly run rate above 20 kt by Q3 FY27.
Expansion
- Gamsberg Phase II added 200 KTPA of capacity, taking Zinc International's total capacity to 500 KTPA.
- The Copper International rod plant in KSA is expected to be commissioned in Q3 FY27.
- FACOR's 330 KTPA smelter plant is expected to operate in H2 FY28.
- Vedanta invested ₹1,135 crore in growth projects, capacity expansions, mine development and resource security initiatives during the quarter.
Problems & risks
- Copper International sales declined because supply-chain disruptions followed the closure of the Strait of Hormuz.
- Copper International sales were also affected by geopolitical tensions across the region.
What to watch
- Whether consolidated operating margin holds above 37.62%.
- Copper International’s quarterly run rate against management’s 20 kt Q3FY27 target.
- Whether Gamsberg Phase II moves beyond stabilisation while Zinc International’s capacity stands at 500 KTPA.