ICRA

Vedanta Resources, the parent company of India-listed mining group, posted its second highest ever consolidated EBITDA of $4.7 billion for FY24, a year which its chairman Anil Agarwal described as 'pivotal year' that will result in "a strong Vedanta. "Revenue (before special items) for the year at $17.1 billion was 6 per cent lower than $18.1 billion of the previous year "primarily driven by lower output commodity prices primarily of aluminium, zinc and brent, partially offset by higher volume at aluminium, copper and iron ore business," the conglomerate said in a statement on its website. It posted the second highest ever consolidated EBITDA of $4.7 billion, 2 per cent higher year-on-year (FY 2022-23: $4.6 billion). "This was mainly due to softening of input commodity prices coupled with strategic cost savings, one time arbitration award in oil and gas business which is partially offset by slip in commodity prices primarily of aluminium, zinc and brent and strategic hedging gain recognised in previous year."

Vedanta Resources posts 2nd highest consolidated EBITDA of $4.7 bn in FY24

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved an investment of ₹1,939 crore for the construction of the 240 MW. Heo Hydro Electric Project (HEP) in Shi Yomi district of Arunachal Pradesh. The project, expected to generate 1,000 million units (MU) of energy. annually, aims to improve power supply in the state and contribute to the balancing of the national grid. The project, with an estimated completion period of 50 months, will be executed by a joint venture between the North Eastern Electric Power Corporation Ltd.and the Government of Arunachal Pradesh. The central government will provide ₹127.28 crore as budgetary support for enabling infrastructure such as roads, and associated transmission lines, along with ₹130.43 crore as financial assistance toward the state’s equity share.

Cabinet okays ₹1,939 crore Heo hydro project in Arunachal to generate 1,000 MU power

Shares of Vedanta rose over 1% to Rs 465 after the credit rating agency Fitch upgraded Vedanta Resources’ (VRL) long-term foreign-currency issuer default rating to 'B+' from 'B-' and changed the outlook to stable. This was followed by a "significant reduction" in the company's refinancing risks. Besides, it has upgraded the ratings on the USD 300 million June 2028 bonds and USD 500 million December 2031 bonds, issued by VRL's subsidiary Vedanta Resources Finance II Plc (VRF2), and unconditionally and irrevocably guaranteed by VRL, to 'B+' from 'B-' with Recovery Rating of 'RR4, according to a statement by Fitch.

Vedanta shares rise as Fitch upgrades rating to B+, changes outlook to stable

While VDL has a demonstrated track record in the metal and mining business, the company’s operation is exposed to the cyclical characteristics inherent in volatile metal prices, which causes swings in profitability and cash flows and increases the business risks. Nonetheless, VDL’s competitive cost position in most businesses, especially zinc, mitigates the risk to some extent.

With  its  presence  in  the  metal  and  mining  business,  the  company  remains  exposed  to  the industry wide risks pertaining to Government policies on land acquisition, environmental and forest clearance, etc that may adversely impact its operations in case of any adverse rulings. Nonetheless, a demonstrated track record of presence in the metal and mining business over the last few decades mitigates the risk to some extent.


The issuer has made timely interest payments.

Anil Agarwal ,Non Executive Chairman

VDL has a diversified metals portfolio  spanning  zinc,  silver,  lead,  aluminium,  copper  and  nickel.  The  company  also  has  presence  in  oil  and  gas,  ferrous metals, including iron ore, and power generation projects. The large scale of operations with a healthy market share in the domestic aluminium and the zinc businesses and the cost-efficient operations in the domestic zinc and oil and gas segments strengthen VDL’s operating profile.

The growth in demand for non-ferrous metals (viz.  zinc,  aluminium  and  copper)  to  remain  healthy  at  ~9-10%  in  FY2025and  FY2026.Healthy  demand  is  likely  to  support volume growthand realisations.


On the back of the recent developments, including the successful fund-raising worth ~$ 1 billion by the company via a QIP in July  2024  and  an  additional  ~$400  million  generated  from  Hindustan  Zinc  Limited’s OFS in  August  2024,  the  overall  group leverage  and  coverage  metrics is  expected  to  improve in  FY2025  and  beyond. The interest coverage is also expected to improve to ~3.5-4.0 times in FY2025 and FY2026 from 2.2 times in FY2024.

Security Name: 9.50% Vedanta Limited 20 Aug 2027

ISIN:

INE205A08020

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Recent News

Vedanta Resources posts 2nd highest consolidated EBITDA of $4.7 bn in FY24

Cabinet okays ₹1,939 crore Heo hydro project in Arunachal to generate 1,000 MU power

Vedanta shares rise as Fitch upgrades rating to B+, changes outlook to stable

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