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Vedanta Upgraded to BB by S&P
May 15, 2026
Vedanta Resources was upgraded by two notches to BB from B+ by S&P. The upgrade follows improving earnings, stronger liquidity, and continued deleveraging. The upgrade is underpinned by the company’s better cost structure, driven by the ramp-up of its alumina refinery in Lanjigarh, which is expected to cut aluminium production costs by $50/ton. Further backward integration into bauxite mining over the next 12–18 months is expected to reduce costs even more. A growing share of value-added products in both the aluminium and zinc divisions is also set to boost sales premiums and overall earnings. On the financial side, S&P forecasts EBITDA of around $7bn in each of fiscal years 2027 and 2028. Adjusted debt is expected to decline by $500mn in FY2027 and $1bn in FY2028, keeping the FFO-to-debt ratio well above 30%. Liquidity has improved markedly, with over $2bn in new long-term banking lines secured since early-2026, more than $3bn in cash on hand, and strong operating cash flows. The company’s elongated debt maturity profile and refinancing of high-cost debt have further strengthened its position. S&P views the recent demerger of subsidiary Vedanta Ltd. into five listed entities as broadly neutral to the credit profile, as it does not affect the holding company’s access to cash flows. However, it does introduce some complexity, since cash is no longer freely fungible across businesses and any funding mismatches must now be addressed at the individual entity level. Vedanta was recently upgraded to Ba3 and BB- by Moody’s and Fitch, respectively.
Vedanta’s dollar bonds traded stable. Its 11.25% 2031s were at 110.7, yielding 7.3%.
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