CRISIL upgrades Vedanta Group firms to AA+, citing demerger success, sharp deleveraging and record profitability

THEBUSINESSBYTES BUREAU

MUMBAI, JULY 17, 2026

In a major endorsement of Vedanta Group’s strengthened financial position and post-demerger transformation, CRISIL Ratings has upgraded the long-term ratings of Vedanta Limited, Vedanta Aluminium and Vedanta Oil & Gas to AA+/Stable, while removing all three companies from “Rating Watch with Developing Implications.” Vedanta Power’s guaranteed long-term bank facilities have also been upgraded to AA+(CE), while ESL Steel Ltd, a subsidiary of Vedanta Iron & Steel, has been reaffirmed at AA/Stable. The latest action marks Vedanta Limited’s strongest credit standing in more than a decade and its highest rating since 2014.

The rating agency attributed the upgrades to the successful execution of the Group’s demerger, significant deleveraging, improved financial flexibility and record operating performance across key businesses. CRISIL noted that the Group’s diversified portfolio, market leadership in core sectors and disciplined capital allocation have considerably strengthened its overall credit profile.

For Vedanta Limited, CRISIL highlighted its position as the flagship company with unmatched scale and leadership across India’s natural resources sector, backed by its 61 per cent stake in Hindustan Zinc, one of the world’s leading producers of zinc, lead and silver. The company also maintains a strong presence in copper, nickel, ferroalloys and holds 10 critical and strategic mineral blocks.

According to CRISIL, Vedanta Limited’s financial profile has strengthened significantly, with net leverage improving to 0.7 times as of March 31, 2026 under the demerged structure. Despite planned growth capital expenditure, leverage is expected to remain comfortably below one time over the medium term. The agency further observed that lower leverage, sustained earnings and robust cash flows from Hindustan Zinc have enhanced the company’s financial flexibility, supported by the substantial market value of its investments.

Vedanta Aluminium, India’s largest aluminium producer and the world’s third-largest outside China, also received strong recognition for its market leadership and operational efficiency. CRISIL described the company as having a dominant position in the domestic aluminium industry with low-cost operations and an estimated 48 per cent market share. The agency highlighted a record financial performance in FY26, with EBITDA rising 43 per cent year-on-year to ₹25,208 crore, the highest in the company’s history. It expects net leverage to remain below 1–1.25 times, while interest coverage is projected to stay above eight times in FY27, reflecting continued financial resilience.

Vedanta Oil & Gas emerged as one of the strongest credit stories within the portfolio, with CRISIL noting that the company reported an estimated EBITDA of around ₹4,350 crore in FY26 and has transitioned into a net cash position following the demerger due to limited debt allocation. The agency expects debt levels to remain broadly stable and net debt-to-EBITDA to stay negative over the medium term, underscoring the business’s strong cash generation capabilities and prudent capital management.

The upgrade of Vedanta Power’s guaranteed facilities to AA+(CE) was driven by the stronger credit profile of guarantor Vedanta Limited. CRISIL pointed to the company’s stable contracted portfolio and secure fuel arrangements, while highlighting that the flagship Talwandi Sabo thermal power plant maintained an availability of 83 per cent during FY26, comfortably above the 80 per cent threshold required for full fixed-charge recovery under its 25-year power purchase agreement.

At the Group level, CRISIL emphasised that Vedanta’s diversified presence across zinc, silver, lead, aluminium, copper and nickel, combined with its leadership in domestic aluminium and zinc markets and cost-efficient operations, continues to strengthen its operating profile. The agency also observed that Vedanta Resources’ financial flexibility has improved significantly following the demerger, with the market value of its holdings in the demerged companies providing a market value cover of approximately 5.6 times against its net debt as of June 30, 2026.

The latest ratings upgrade reflects growing confidence in Vedanta Group’s stronger balance sheet, disciplined capital allocation and sustained earnings trajectory following its corporate restructuring. With operations spanning India, Africa, the Middle East and East Asia, the Group remains one of the world’s leading producers of metals, oil and gas, critical minerals, power and technology. Through its diversified portfolio, Vedanta continues to support the global energy transition, industrial growth and emerging technologies while advancing its sustainability agenda, including its commitment to achieve net-zero emissions by 2050 or earlier.