Vedanta gets long term ratings upgrade from ICRA following QIP, Hind Zinc OFS
Vedanta's long-term ratings were upgraded by ICRA following successful fund-raising efforts, including a $1 billion QIP and $400 million OFS of Hindustan Zinc shares. These moves are expected to improve credit metrics and reduce debt, enhancing fi...
By Shivendra Kumar, ETMarkets.com |
Agencies
Metal major Vedanta has received a long-term ratings upgrade from ICRA Rating on the expectation of improvement in company's credit metrics, following the successful fund-raising worth $1 billion via a qualified institutional placement (QIP) in July 2024 and an additional $400 million generated from the offer for sale (OFS) of Hindustan Zinc Limited (HZL) in August 2024.
The rating for its 'Longterm/S term –Unallocated limits' instrument was upgraded to [ICRA]AA from [ICRA]AA-/[ICRA]A1+ rating watch with developing implications. The Longterm –Fund based –Term loan instrument was upgraded to [ICRA]AA from [ICRA]AA- and continues on rating watch with developing implications. As for Commercial Paper the rating was upgraded to ICRA]A1+ rating watch with developing implications.
On the rationale, ICRA said, "These funds (QIP and OFS) are expected to be primarily allocated towards deleveraging, which will also lower the overall interest expenses for the entity. Further, the $500 million raised by Vedanta Resources Limited (VRL) through a stake sale in VDL in July 2024 will help reduce the Group's overall debt burden."
"Consequently, the overall group leverage (total debt/OPBDITA) is anticipated to decline to 2.3-2.5 times in FY2025 and FY2026, from 3.6 times reported in FY2024, substantially strengthening the entity’s credit profile. The interest coverage is also expected to improve to 3.5-4.0 times in FY2025 and FY2026 from 2.2 times in FY2024. Additionally, VRL is looking to refinance a substantial portion of its outstanding bonds to lower the consolidated entity’s interest costs further. All the deleveraging efforts are expected to improve the overall financial flexibility of the Group," the note said further.
Vedanta reported 37% year-on-year (YoY) growth in its consolidated net profit at Rs 3,606 crore in the first quarter. This compares with Rs 2,640 crore posted in the previous year period.
Revenue from operations during the reporting quarter rose 6% YoY to Rs 35,239 crore as against Rs 33,342 crore in the corresponding quarter of last year.
The company's EBITDA during the quarter jumped 47% YoY to Rs 10,275 crore and margins stood at 34%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
The rating for its 'Longterm/S term –Unallocated limits' instrument was upgraded to [ICRA]AA from [ICRA]AA-/[ICRA]A1+ rating watch with developing implications. The Longterm –Fund based –Term loan instrument was upgraded to [ICRA]AA from [ICRA]AA- and continues on rating watch with developing implications. As for Commercial Paper the rating was upgraded to ICRA]A1+ rating watch with developing implications.
On the rationale, ICRA said, "These funds (QIP and OFS) are expected to be primarily allocated towards deleveraging, which will also lower the overall interest expenses for the entity. Further, the $500 million raised by Vedanta Resources Limited (VRL) through a stake sale in VDL in July 2024 will help reduce the Group's overall debt burden."
"Consequently, the overall group leverage (total debt/OPBDITA) is anticipated to decline to 2.3-2.5 times in FY2025 and FY2026, from 3.6 times reported in FY2024, substantially strengthening the entity’s credit profile. The interest coverage is also expected to improve to 3.5-4.0 times in FY2025 and FY2026 from 2.2 times in FY2024. Additionally, VRL is looking to refinance a substantial portion of its outstanding bonds to lower the consolidated entity’s interest costs further. All the deleveraging efforts are expected to improve the overall financial flexibility of the Group," the note said further.
Vedanta reported 37% year-on-year (YoY) growth in its consolidated net profit at Rs 3,606 crore in the first quarter. This compares with Rs 2,640 crore posted in the previous year period.
Revenue from operations during the reporting quarter rose 6% YoY to Rs 35,239 crore as against Rs 33,342 crore in the corresponding quarter of last year.
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The company's EBITDA during the quarter jumped 47% YoY to Rs 10,275 crore and margins stood at 34%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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