Vedanta Group Secures Massive Rating Upgrades from CRISIL Following Strategic Demerger

Vedanta Group Secures Massive Rating Upgrades from CRISIL Following Strategic Demerger​

CRISIL Ratings has upgraded the credit ratings for Vedanta Ltd and its newly demerged entities, Vedanta Aluminium Metal and Vedanta Oil and Gas. The agency cited significantly bolstered business and financial risk profiles across the group following the strategic corporate restructuring.

The upgrade serves as a major confidence booster for investors, signaling improved structural stability and clearer operational focus for each business segment. CRISIL highlighted that the demerger has successfully streamlined the entities to showcase their individual strengths.

Vedanta Ltd Receives Strategic Rating Boost via Hindustan Zinc Integration​

CRISIL upgraded Vedanta Ltd's long-term rating to CRISIL AA+/Stable from CRISIL AA/Watch Developing, while reaffirming its 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.

The rating agency emphasized that it continues to fully consolidate Hindustan Zinc Ltd (HZL) with Vedanta due to deep strategic, operational, and financial integration. Following the demerger, HZL is expected to account for more than 95% of Vedanta's earnings in fiscal 2026 on a post-demerger basis.

This concentration provides a stronger business risk profile, leveraging HZL's position as a market-leading, low-cost zinc producer. Financial flexibility has been further enhanced by lower leverage and sustained cash flows from HZL, combined with the market value of Vedanta's investment in the firm.

CRISIL noted that the financial risk profile improved significantly due to the continued consolidation of HZL and the deliberate allocation of debt to the demerged entities. Under the new structure, net debt to EBITDA is estimated at around 0.7 times as of March 31, 2026, accounting for guarantees to group entities like VPL and VISL.

Vedanta Aluminium Metal Secures AA+ Rating with Dominant Market Position​

Vedanta Aluminium Metal Ltd also saw its long-term rating raised to CRISIL AA+/Stable from CRISIL AA/Watch Developing, with a reaffirmed short-term rating of CRISIL A1+. The agency assigned a CRISIL AA+ rating with a Stable outlook to the company's non-convertible debentures.

The upgrade reflects a robust business risk profile supported by the company's dominant position in the domestic aluminium industry. Analysts highlight cost-efficient operations and strong profitability, which are expected to see further improvement in the near term.

Despite ongoing capital expenditure, the agency noted that the financial profile remains strong with healthy cash accruals. CRISIL expects leverage to remain below 1.0 to 1.25 times over the medium term and will continue to fully consolidate Bharat Aluminium Company Ltd (BALCO) with Vedanta Aluminium due to strong operational linkages.

Vedanta Oil & Gas Upgrade Reflects Strong Production Assets​

Vedanta Oil and Gas Ltd received a significant long-term rating upgrade to CRISIL AA+/Stable from CRISIL A+/Watch Developing, while its short-term rating was withdrawn. This reflects the stronger business and financial risk profile following the transfer of oil and gas undertakings into the dedicated company.

As one of India's largest private-sector oil and gas producers, the entity operates 44 blocks covering more than 47,000 square kilometres. It produced approximately 87 kilo barrels of oil equivalent per day (kboepd) in fiscal 2026, benefiting from a healthy reserve base and established producing assets.

The company maintains a competitive operating cost structure, with more than 80% of production originating from its Rajasthan assets. While the agency noted that a gradual decline in production volumes over recent years remains a monitorable factor, ongoing exploration programs are expected to support production sustainability and reserve replacement over the medium term.