CRISIL upgrades Vedanta, Vedanta Aluminium and Vedanta Oil & Gas ratings after demerger

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CRISIL Ratings has upgraded the credit ratings of Vedanta Ltd, Vedanta Aluminium Metal Ltd and Vedanta Oil and Gas Ltd following the group's demerger, citing stronger business and financial risk profiles across the three companies.

Vedanta Ltd's long-term rating was upgraded to CRISIL AA+/Stable from CRISIL AA/Watch Developing, while its short-term rating was reaffirmed at CRISIL A1+. The rating agency also assigned a CRISIL AA+/Stable rating to the company's non-convertible debentures.

According to CRISIL, Hindustan Zinc Ltd (HZL) will continue to be fully consolidated with Vedanta because of the strong strategic, operational and financial integration between the two companies. HZL contributed more than 95 per cent of Vedanta's earnings in fiscal 2026 on a post-demerger basis, supported by its position as a low-cost zinc producer with strong profitability and cash generation.

CRISIL also said Vedanta's financial profile has strengthened following the debt allocation to the demerged entities. Under the new structure, the company's net debt-to-EBITDA ratio is estimated at around 0.7 times as of March 31, 2026, after accounting for guarantees extended to group entities. The agency expects continued earnings support from HZL, while higher contributions from Zinc International, copper and ferro alloys businesses are expected to strengthen performance over the medium term.

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Vedanta Aluminium

Vedanta Aluminium Metal Ltd also received a rating upgrade, with its long-term rating raised to CRISIL AA+/Stable from CRISIL AA/Watch Developing. Its short-term rating was reaffirmed at CRISIL A1+, while its non-convertible debentures were assigned a CRISIL AA+/Stable rating.

CRISIL attributed the upgrade to Vedanta Aluminium's leading position in India's aluminium industry, cost-efficient operations and strong profitability, which it expects to improve further. The agency said the company's financial profile remains supported by healthy earnings, strong cash accruals and leverage expected to remain below 1.0-1.25 times over the medium term despite ongoing capital expenditure.

The rating agency also confirmed that Bharat Aluminium Company Ltd (BALCO) will continue to be fully consolidated with Vedanta Aluminium because of the close operational and strategic relationship between the two companies.

Vedanta Oil & Gas

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

CRISIL said the upgrade reflects the company's stronger business and financial profile following the transfer of Vedanta's oil and gas business as part of the demerger. Vedanta Oil and Gas operates 44 blocks covering more than 47,000 square kilometres and produced around 87 kilo barrels of oil equivalent per day (kboepd) during fiscal 2026.

According to the rating agency, the company benefits from a healthy reserve base, established producing assets and competitive operating costs. More than 80 per cent of its production comes from its Rajasthan operations, while ongoing exploration activities are expected to support production sustainability and reserve replacement over the medium term, although declining production volumes remain a key monitorable.

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