New Delhi, May 7 (PTI) Moody's Ratings (Moody's) has upgraded Vedanta Resources Ltd's corporate family rating to Ba3 from B1 and has maintained a positive outlook on the company.
The Ba3 rating reflects the company's complex organisational structure with less than full ownership of its operating subsidiaries and a developing track record of liquidity management.
A corporate family rating (CFR) is a credit rating agency's opinion on a corporate group's overall ability to honour its financial obligations, treating the parent and subsidiaries as a single economic entity.
At the same time, Moody's has upgraded the rating on senior unsecured bonds issued by VRL's arm, Vedanta Resources Finance II Plc, from B2 to Ba3, which are guaranteed by the global diversified mining and natural resources firm.
Moody's has said in a statement that it has maintained a positive outlook on both entities.
"The upgrade reflects improvements in VRL's earnings and cash flow, supported by higher production, further vertical integration in its aluminium operations, and favourable commodity prices. We expect VRL to generate about USD 7 billion of EBITDA annually with gross debt/EBITDA of around 2.5x over the next two years under our price sensitivities," Nidhi Dhruv, a Vice President and Senior Credit Officer at Moody's Ratings, said in a statement.
Vedanta Resources has significantly strengthened its liquidity at both the consolidated level and across its operating companies through proactive refinancing and disciplined liability management.
The group has over 2 billion dollars in available multi-year committed credit facilities, which support capital spending at the operating companies and mitigate refinancing risks, Dhruv added.
The group's demerger, effective May 1, 2026, resulted in a more streamlined organisational structure and prompted a reassessment of the structural subordination of the senior unsecured notes.
Although claims at operating companies accounted for around 80 per cent of total consolidated claims as of March 2026, structural subordination is mitigated as the holding company has direct ownership of all operating subsidiaries except Hindustan Zinc.
"This structure enables the holding company to receive a more diversified stream of dividend cash flows from its listed operating companies, supporting coverage of VRL holding company interest expense of more than 2.0x. In addition, the listing of these businesses provides VRL with additional financial flexibility, including the ability to reduce modest stakes in any subsidiary, if needed," the statement said.
Vedanta's demerger has split Vedanta into multiple sector-focused entities, each with independent growth strategies and capital allocation.