Billionaire Anil Agarwal-controlled Vedanta Resources Limited (VRL) announced a significant ratings upgrade by S&P Global Ratings on Thursday. The rating has been elevated from ‘CCC+’ to ‘B-‘, highlighting VRL’s improving capital structure and enhanced liquidity. S&P has assigned a stable outlook to VRL, recognizing the company’s strategic deleveraging of its balance sheet, which supports sustainable long-term growth.
Robust Financial Performance and Future Projections
Vedanta’s proactive measures have led to a robust capital structure, underpinning its long-term growth potential. S&P has revised its earnings estimates for VRL, projecting the EBITDA for fiscal years 2025 and 2026 to be between US$5.5 billion and US$6.0 billion annually. This ratings upgrade reflects VRL’s strong credit profile, supported by its consistent delivery of superior performance and healthy free cash flows.
Debt Reduction and Interest Expense Decline
S&P’s research update also highlights a positive outlook on VRL’s debt reduction. The agency anticipates the debt at Vedanta Resources level to decrease by another $1 billion, reaching approximately $4.5 billion over the next 12 months. Additionally, interest expenses are expected to drop to between $550 million and $600 million by the end of fiscal 2025, ending on March 31, 2025.
Adequate Internal Funds to Address Debt Maturities
According to S&P, VRL has sufficient internal funds to meet debt maturities amounting to US$1.4 billion by the end of 2025. The stable outlook reflects S&P’s confidence in VRL’s ability to proactively address the maturity of US$1.2 billion of debt due in April 2026. This strategic approach underscores VRL’s commitment to maintaining a strong financial position and ensuring sustainable growth.