Vedanta shares gain 3.8% on S&P Global Ratings upgrade of UK parent

Shares of Vedanta rose 3.8 per cent on Friday after rating agency S&P Global Ratings upgraded the rating of UK parent Vedanta Resources Ltd (VRL) to 'B-' (a stable rating) from 'CCC+', citing an improving capital structure and liquidity.

The stable rating assigned by S&P comes on the back of VRL’s efforts to deleverage its balance sheet, boosting its capital structure and paving the way for sustainable long-term growth.

The rating upgrade comes as a major relief for Anil Agarwal-led VRL, as since last year, the commodities major has faced several rating downgrades with analysts flagging liquidity issues and high default risk.

Experts said the rating upgrade is a reflection of VRL’s improved credit profile and free cash flows.

Shares of the Mumbai-listed Vedanta closed at Rs 447, up Rs 16.4, or 3.8 per cent over the previous day’s close.

S&P estimates VRL’s operating profit (Ebitda) for FY25 and FY26 will be in the range of $5.5 billion to $6 billion annually. The ratings agency estimates the London-headquartered firm’s debt level to decline by another $1 billion to $4.5 billion over the next 12 months. It also estimates interest expenses at VRL to decline to $550 million to $600 million by the end of March 31, 2025.

S&P has noted that VRL has adequate internal funds to meet $1.4 billion of debt maturities due by the end of 2025. “The stable outlook reflects our view that the company will proactively address the maturity of $1.2 billion of debt in April 2026,” the rating agency said in its research update.

Last month, Finsider International, a unit of Anil Agarwal-led VRL, had sold a 2.6 per cent stake in locally listed Vedanta to mobilise Rs 4,184 crore, which was used to pare its debt.

As of March 31, VRL’s debt levels stood at around $6 billion.

Earlier this month, Vedanta raised Rs 8,500 crore (nearly $1 billion) in fresh capital, issuing 193.1 million new equity shares at an issue price of Rs 440 apiece through the qualified institutional placement route.

Following this, the promoter holding in Vedanta has declined from 61.95 per cent at the end of the March 2024 quarter to 56.38 per cent at present.