On the basis of its consistent deleveraging, the planned demerger at its Indian subsidiary, Vedanta Ltd., as well as its excellent growth, operational efficiency, and financial performance, London-based Vedanta Resources Ltd. (VRL) is aiming for an investment grade credit rating.
In order to reduce its total debt from the current USD 5 billion to USD 3 billion by FY27, VRL is committed to strengthening its core minerals, transition metals, energy, and technology portfolios.
The company hopes to receive an investment grade rating in the medium future as a result of its enhanced debt profile, financial performance, and operational efficiency.
According to the source, Vedanta emphasized to investors its strong earnings, sound free cash flows, continuous expansion initiatives, fortified balance sheet, and plans for future deleveraging.
Institutional investors view companies with an investment-grade credit rating as safe investments since they have a strong ability to satisfy their financial obligations. Additionally, it enables a business to borrow funds at reduced interest rates, drawing in a wider pool of investors and making it simpler to access international debt markets.
VRL now has a B+ credit rating from S&P, Fitch, and Moody’s; S&P raised the company’s rating by three notches in FY25.
VRL is aiming for an investment grade rating in around two years since it is tied to their debt reduction goal (to USD 3 billion) by FY27.
According to sources, VRL is now negotiating with banks to pre-pay and refinancing a private credit facility worth USD 550 million that is set to expire in August 2026. According to the individual cited above, it is expected to renew the facility using a bank loan with single-digit interest rates, saving 800-900 basis points and saving USD 47 million in interest costs.
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Following the refinance, the company anticipates upgrading to BB levels, and it will continue to strive for an Investment Grade credit rating of BBB-, which is regarded as the first rung of investment grade rated corporations, in the medium term.
Through its Indian subsidiary, Vedanta Ltd. (VEDL) is nearing the end of its demerger process, which will create four new market-leading, sector-focused companies and help unlock value for current shareholders while providing investors with the chance to invest in pure-play companies.
By September 2025, the corporation anticipates the demerger to be finished.
The business has been steadily deleveraging and refinancing for the last three years. VRL’s net debt dropped from USD 8.9 billion to USD 5 billion between March 2022 and March 2025, the lowest level in ten years.
The net debt to EBITDA ratio of Vedanta Group has dropped from 3.3x in FY20 to 2x in FY25, and it is expected to drop even lower to 1x in the mid-term, according to the results presentation of VRL’s subsidiary.
Additionally, VRL refinanced its whole USD 3.1 billion bond portfolio in FY25, which extended the maturity to FY34 and significantly lowered the average coupon rate by 250 basis points. The company’s credit profile will be considerably enhanced as a result.
The management of VEDL stated on its most recent earnings call that a normalized dividend yielding around 6% might generate USD 800 million in revenue for VRL. In addition to trademark fees, operating free cash flows, and the dividend that Vedanta Ltd. paid to VRL, VRL’s overarching goal of accruing USD 3 billion in debt within two years is still in place.
The subsidiary VEDL revealed its FY25 results in April, showing that its main businesses, Zinc India and Aluminium, were in the top decile and quartile of the global cost curve. Its yearly revenue of USD 17.8 billion was its greatest, and its yearly EBITDA of USD 5.1 billion was its second-highest.
