Vedanta Ltd has been upgraded to a long-term credit rating of ICRA AA+ with a stable outlook by ICRA Limited, a Moody’s Corporation affiliate, following enhancements in its credit profile in FY26 and expectations for further improvements in FY27. This upgrade comes as clarity increases regarding the Vedanta Group’s ongoing demerger, particularly in terms of asset and liability allocation, support mechanisms among group entities, and the operational strength of individual businesses.
ICRA reported that Vedanta Group’s financial profile significantly improved in FY26, aided by a notable rise in base metal prices and enhanced operational performance. The group achieved an operating profit (OPBDITA) of $6.7 billion in FY26, and even after accounting for Hindustan Zinc Limited’s proportional consolidation, the operating profit stood at $5.7 billion, a rise from nearly $3.8 billion in FY25.
The agency highlighted that favorable price-cost dynamics across Vedanta’s companies led to substantial enhancements in financial performance, capital structure, liquidity, and debt coverage metrics. Additionally, ICRA noted a marked improvement in refinancing capabilities, resulting in lower average interest costs during FY26.
“Moreover, the refinancing risk at Vedanta Resources Limited (VRL) has reduced significantly in recent years, supported by repayments and elongation of the debt maturity profile,” ICRA stated.
In a related development, ICRA assigned an ICRA AA+ rating with a stable outlook to Vedanta Aluminium Metal Limited (VAML), the demerged aluminium segment. The agency anticipates that aluminium prices will remain robust in the near term due to global supply constraints and geopolitical uncertainties.
On the London Metal Exchange (LME), aluminium prices averaged $2,771 per tonne in FY26, nearly 10 percent higher than the previous year. This elevated pricing, along with a stable cost structure, is expected to sustain healthy profitability, with OPBDITA per tonne projected to exceed $1,250 in FY27, according to ICRA.
The agency also expects aluminium volumes to increase with the commissioning of Bharat Aluminium Company Limited’s (BALCO) smelter and value-added product capacity. Coverage metrics are anticipated to remain strong, with total debt to operating profit (TD/OPBDITA) expected to stay below 1.5 times, while interest coverage is estimated at around 7 times in the near-to-medium term, improving from 1.7 times and 6.4 times respectively in the previous year.
Furthermore, ICRA upgraded the rating of Talwandi Sabo Power Limited (TSPL), which will be renamed Vedanta Power Ltd, to ICRA AA- with a stable outlook, removing it from “watch with developing implications.” This upgrade is attributed to enhanced operational and financial risk profiles following the addition of new power assets, including the 600 MW Jharsuguda Independent Power Plant in Odisha, 600 MW Unit-1 of Athena Chhattisgarh Power in Chhattisgarh, and the 1,000 MW Meenakshi power plant in Andhra Pradesh.
Additionally, the second 600 MW unit of ACP is expected to be commissioned by the end of the current financial year, which ICRA believes will further strengthen the company’s credit profile through increased scale, diversification, and more stable cash flows.
Lastly, ICRA removed Vedanta Ltd’s ratings from “watch with developing implications,” citing increased clarity on asset-liability allocation under the ongoing demerger and a clearer support framework among group entities. Post-demerger, the agency expects stronger cash-generating entities within the Vedanta Group to continue supporting dividend requirements while maintaining flexibility to fund obligations through inter-group support if necessary. ICRA added that the group’s stronger entities are anticipated to continue providing financial support across businesses when needed, reinforcing overall balance sheet resilience as the demerger progresses.
