Vedanta Iron Shares Fall 5% Despite Quarterly Loss Narrowing to 324 Crore Rupees
Key Facts
Shares of Vedanta Iron and Steel fell 5% to the lower circuit limit, at 26.56 rupees, on October 28, after the company reported results for the second quarter of fiscal 2027. The results showed a consolidated net loss of 324 crore rupees, compared with a loss of 477 crore rupees in the year-earlier period. Meanwhile, earnings before interest, taxes, depreciation and amortization rose 56% year on year to 83 crore rupees, despite falling about 84% from the previous quarter. The differing comparisons reflect year-on-year improvement in operating profit alongside a sharp quarterly decline, while the company remained loss-making. The company's disclosures also covered production and cost pressures, as well as a tax notice received by its subsidiary ESL Steel.
Consolidated revenue from operations stood at 2,788 crore rupees for the quarter, down 2.4% from 2,858 crore rupees a year earlier. The two main businesses had mixed results: iron ore revenue fell 8.3% year on year to 638 crore rupees, while steel production revenue rose 17% to 2,488 crore rupees. Raw material costs increased 9.2% to 1,714 crore rupees, compared with 1,569 crore rupees in the year-earlier quarter. The company attributed the quarterly pressure on operating performance to seasonal disruptions in iron ore production, planned plant shutdowns, and higher input and conversion costs. These factors put the decline in iron ore revenue and increase in raw material costs in the context of the drop in profit from the previous quarter.
For the first half of fiscal 2027, revenue rose 8% to 6,450 crore rupees, and operating profit increased 54% to 598 crore rupees. The operating profit margin widened to 9%, up 275 basis points year on year. The first-half post-tax loss also narrowed to 203 crore rupees from 622 crore rupees in the year-earlier period. The company recorded its highest half-yearly production of pig iron, at 568,000 tonnes, up 4% year on year, while steel production rose 4% to 1.114 million tonnes. These half-year results reflect improvements in revenue, margin and production compared with the year-earlier period, alongside a continued net loss.
But quarterly data showed production declines from the previous period in some areas. Steel production, including pig iron, stood at 532,000 tonnes, up 4% year on year but down from 582,000 tonnes in the first quarter. Iron ore production also fell 13% year on year to 1.5 million dry metric tonnes. Chief Executive Pankaj Kumar Sharma said first-half operating performance improved, supported by higher steel selling prices, increased volumes and efficiency initiatives. He added that planned shutdowns in Bokaro and Goa had been completed to strengthen asset reliability in the second half.
In a separate disclosure, the company said ESL Steel received a demand-cum-show-cause notice on October 26, 2026, proposing recovery of goods and services tax and reversal of input tax credits worth 11,76,63,519 rupees, in addition to interest and a penalty. The notice relates to audit observations for fiscal 2022-23 through fiscal 2023-24. The company said it did not expect a material financial or operational impact, and that ESL was reviewing the notice and would take appropriate steps under applicable laws. The disclosure did not estimate the possible interest or penalty. This means the amount stated in the notice relates to the demand and tax credits, while the company described the expected impact as immaterial.
In trading, the stock had fallen 14.3% in the month before the October 28 session, despite rising more than 27% since its listing on June 15, 2026. After touching 26.56 rupees, it traded down 3.7% near 26.73 rupees, with trading volume exceeding 3.8 million shares on the NSE and BSE. The company said its next priorities included strengthening operational efficiency, managing costs, improving production consistency and financial performance, and maintaining financial discipline. The focus follows the company's attribution of quarterly pressures to iron ore production disruptions, planned shutdowns and higher costs. It also said it had secured 21 megawatts of solar power through open access for ESL's Bokaro operations, with the potential to reduce annual emissions by about 50,000 tonnes of carbon dioxide.