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Informist, Wednesday, May 27, 2026

--ICRA upgrades Vedanta's long term rating to AA+ from AA

MUMBAI – ICRA Ltd. Wednesday upgraded Vedanta Ltd.'s long-term rating to AA+ from AA. The rating company has assigned a stable outlook on the upgraded rating. ICRA said in its rating action statement that the recent sharp increase in aluminium and silver prices significantly strengthened Vedanta Group's financial risk profile and improved its capital structure, liquidity and debt coverage indicators.

ICRA has also pointed to the improvement in the operating performance of Zinc India segment of Vedanta Ltd. The rating company expects benefits from low cost of production in Vedanta's Zinc India segment with the zinc smelters "positioned in the first decile of the global cost curve." Further, lower power costs and integrated nature of Zinc India's operations drove a sharp rise in the operating profit per tonne rise of the segment in FY26, it said.

ICRA also removed the watch with developing implication parameter from the upgraded rating of Vedanta. It said this, along with the main rating upgrade, was due to greater clarity on the allocation of assets and liabilities under the ongoing demerger scheme of the Vedanta Group. The rating company pointed out after the demerger, Vedanta's aluminium, oil and gas, power and iron and steel businesses would be separate standalone listed entities and the credit profile of residual Vedanta would largely comprise the copper business along with holdings in Hindustan Zinc Ltd., the international zinc operations, and few other investments.

ICRA's rating of Vedanta is for INR 21.58 billion of long-term fund-based term loan, INR 25.75 billion of a three-year tenured non-convertible debenture issue maturing in March 2029, INR 8.25 billion of yet to be place non-convertible debentures, INR 25 billion yet to be placed commercial paper, and INR 13.42 billion of long-term and short-term unallocated limits.

Credit challenges may, however, hover over Vedanta, according to the rating company. It cited the post demerger dependence on dividend inflow for debt service at standalone level. "The operations under VDL (Vedanta Ltd.) are exposed to the cyclicality inherent in volatile metal prices, which causes fluctuation in profitability and cash flows and increases the business risks," ICRA said in its rating rationale statement.

The rating company also pointed to the high leverage of the overall Vedanta Group, including Vedanta Resources, may lead to higher dividend outflows as being a challenge. Despite the improvement in profitability in 2025-26 (Apr-Mar), the Vedanta Group's overall leverage remains elevated, with the adjusted net debt high at about $12.5 billion at the end of FY26.

On Wednesday, shares of Vedanta closed 2.8% higher at INR 354.70 on the National Stock Exchange.  End

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

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