Vedanta, along with its demerged entities Vedanta Aluminium and Vedanta Oil & Gas, receives significant rating upgrades from CRISIL.
In light of recent upward rating adjustments by CRISIL Ratings, Vedanta Ltd and its demerged entities—Vedanta Aluminium Metal and Vedanta Oil and Gas—are positioned favorably in the financial landscape. The long-term rating for Vedanta Ltd has been lifted from CRISIL AA/Watch Developing to CRISIL AA+/Stable, while its short-term rating remains at CRISIL A1+. This reflects the enhanced business and financial risk profiles following the restructuring, notably due to the consolidation of Hindustan Zinc Ltd (HZL), which continues to account for over 95% of Vedanta’s earnings post-demerger. The reinforced strategic integration between Vedanta and HZL underscores the stability and cash-generating capabilities of the latter, known for its competitive advantage as a low-cost zinc producer.
CRISIL’s assessment highlights an improved financial risk profile for Vedanta, particularly with an estimated net debt to EBITDA ratio of around 0.7 times as of March 31, 2026. This indicates a strong enhancement in the company’s financial flexibility, driven by reduced leverage and sustained earning potential from HZL. With a focus on ramping up contributions from Zinc International, alongside copper and ferro alloys, Vedanta is expected to maintain its earnings momentum, affirming investor confidence in its long-term growth trajectory.
The rating upgrade extends to Vedanta Aluminium Metal, which now carries a CRISIL AA+/Stable long-term rating, attributed to its robust operational capabilities and prominent market position in India’s aluminium sector. The company’s financial performance is buoyed by strong profit margins and healthy cash accruals, coupled with a manageable net debt-to-EBITDA ratio. As Vedanta Aluminium ventures into increased capital expenditures, it is anticipated that leverage will remain comfortably below 1.0-1.25 times in the medium term, reinforcing its investment appeal.
Furthermore, Vedanta Oil and Gas has also benefited from the ratings elevation to CRISIL AA+/Stable, reflecting its significant role as a private-sector oil and gas player. The company is effectively capitalizing on its extensive production capacity and established asset base, predominantly from its Rajasthan facilities. While ongoing exploration initiatives are critical for ensuring production sustainability and replacing reserves, a noted decline in output poses a potential concern. Overall, CRISIL’s favorable outlooks for these entities signal positive market conditions that investors should closely monitor.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)