Vedanta, demerged Vedanta Aluminium, Vedanta Oil & Gas get rating upgrades from CRISIL

Vedanta, newly demerged Vedanta Aluminium Metal and Vedanta Oil and Gas have received rating upgrades from CRISIL Ratings following the group's demerger, with the agency citing stronger business and financial risk profiles across the entities.

CRISIL upgraded Vedanta Ltd's long-term rating to CRISIL AA+/Stable from CRISIL AA/Watch Developing and reaffirmed its short-term rating at CRISIL A1+. It also assigned a CRISIL AA+ rating with a Stable outlook to the company's non-convertible debentures.

The rating agency said it continues to fully consolidate Hindustan Zinc Ltd (HZL) with Vedanta due to the strong strategic, operational and financial integration between the two companies. Following the demerger, HZL accounted for more than 95% of Vedanta's earnings in fiscal 2026 on a post-demerger basis, strengthening the company's business risk profile given HZL's position as a market-leading, low-cost zinc producer with strong profitability and cash generation.


Also Read | Vedanta AGM: Anil Agarwal maps aggressive expansion after demerger, targets scale-up across metalsCRISIL also said Vedanta's financial risk profile has improved significantly due to the continued consolidation of HZL and the allocation of debt to the demerged entities. Net debt to EBITDA under the demerged structure is estimated at around 0.7 times as of March 31, 2026, after factoring in guarantees extended to group entities such as VPL and VISL. It added that lower leverage, sustained earnings and cash flows from HZL, along with the market value of Vedanta's investment in HZL, have strengthened the company's financial flexibility. Over the medium term, the expected ramp-up in Zinc International and improving contributions from the copper and ferro alloys businesses are expected to support earnings.

Vedanta Aluminium
Vedanta Aluminium Metal Ltd also received an upgrade, with CRISIL raising its long-term rating to CRISIL AA+/Stable from CRISIL AA/Watch Developing, while reaffirming the short-term rating at CRISIL A1+. The agency also assigned a CRISIL AA+ rating with a Stable outlook to the company's non-convertible debentures.

According to CRISIL, the upgrade reflects Vedanta Aluminium's strong business risk profile, supported by its dominant position in the domestic aluminium industry, cost-efficient operations and strong profitability, which is expected to improve further in the near term. The agency said the company's financial profile remains strong, backed by robust earnings, healthy cash accruals and net debt-to-EBITDA within rating thresholds despite ongoing capital expenditure. It expects leverage to remain below 1.0-1.25 times over the medium term. CRISIL also said it will continue to fully consolidate Bharat Aluminium Company Ltd (BALCO) with Vedanta Aluminium due to the strong operational and strategic linkages between the two entities.

Vedanta Oil & Gas
Vedanta Oil and Gas Ltd's long-term rating was upgraded to CRISIL AA+/Stable from CRISIL A+/Watch Developing, while its short-term rating was withdrawn.

CRISIL said the upgrade factors in the company's stronger business and financial risk profile following the transfer of Vedanta's oil and gas undertaking into the company as part of the demerger. Vedanta Oil and Gas is one of India's largest private-sector oil and gas producers, operating 44 blocks covering more than 47,000 square kilometres and producing approximately 87 kilo barrels of oil equivalent per day (kboepd) in fiscal 2026.

The rating agency said the company benefits from a healthy reserve base, established producing assets and a competitive operating cost structure. More than 80% of production comes from its Rajasthan assets, while operating efficiency remains strong, supported by first-quartile operating costs and the production-sharing contract framework.

Also Read | Vedanta Aluminium vs Power vs Oil & Gas vs Iron & Steel: Which stock should you buy?CRISIL added that ongoing exploration programmes are expected to support production sustainability and reserve replacement over the medium term, although the gradual decline in production volumes over the past few years remains a key monitorable.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)