Credit rating agency ICRA, an affiliate of Moody's Corporation, has upgraded Vedanta Limited's long-term credit rating to ICRA AA+ with a stable outlook. This positive revision comes as ICRA gains greater clarity on the allocation of assets and liabilities under the ongoing demerger scheme of the Vedanta group, alongside a material improvement in the company's credit profile in FY26, with further strengthening anticipated in FY27.
Vedanta Limited's Enhanced Financial Standing
ICRA's upgrade for Vedanta Limited reflects a significant improvement in the group's financial performance, driven by favourable price-cost movements. This has led to a stronger capital structure, enhanced liquidity, and improved debt coverage indicators. The agency also noted a material improvement in the refinancing ability of the Vedanta group, resulting in a sharp easing of average interest costs in FY26. Furthermore, refinancing risk at Vedanta Resources Limited (VRL) has reportedly reduced significantly due to repayments and an elongated debt maturity profile.
The group's strong financial risk profile is underscored by a reported OPBDITA of $6.7 billion in FY2026, or $5.7 billion considering proportionate consolidation of Hindustan Zinc Limited, a substantial increase from approximately $3.8 billion in FY2025. Post-demerger, ICRA expects stronger cash-generating entities within the Vedanta group to support dividend requirements, with flexibility for funding from other group entities. Continued intra-group support is also anticipated.
Vedanta Aluminium Metal Receives Stable AA+ Rating
The demerged entity, Vedanta Aluminium Metal Limited (VAML), has also been assigned an ICRA AA+ rating with a stable outlook. This rating action factors in the expectation of a further strengthening of VAML's financial profile in FY2027, building on the strong improvement seen in FY26. This is primarily attributed to a sharp increase in global aluminium prices.
Aluminium prices on the London Metal Exchange (LME) averaged $2,771/tonne in FY26, about 10 percent higher than the previous fiscal year, and are expected to remain firm in the near term due to global supply-side constraints and geopolitical factors. This is projected to support VAML’s credit profile, with a healthy OPBDITA/tonne of over $1,250/tonne expected in FY2027, coupled with steady cost structures. Volume increases are also expected with the commissioning of Bharat Aluminium Company Limited’s (BALCO) smelter and value-added product (VAP) capacity.
Vedanta Power Ltd. Rated AA- with Stable Outlook
Talwandi Sabo Power Limited (TSPL), which will be listed as Vedanta Power Ltd post-demerger, has seen its long-term rating upgraded to ICRA AA- with a stable outlook. This upgrade and removal from 'watch with developing implications' follows greater clarity on asset and liability allocation under the demerger scheme, as well as the support framework across group entities.
The improved rating also considers the strengthening of Vedanta Power's operational and financial risk profile through the inclusion of additional power assets. These assets include the 600 MW Jharsuguda Independent Power Plant (JIPP) in Odisha, the 600 MW (unit-1) Athena Chhattisgarh Power (ACP) plant in Chhattisgarh (with unit-2 of 600 MW under construction), and the 1,000 MW Meenakshi power plant in Andhra Pradesh. The expanded asset base is expected to enhance scale, improve diversification, and provide greater cash flow stability for Vedanta Power.