Vedanta credit outlook: Ind-Ra revises Vedanta’s credit outlook to stable from negative


NEW DELHI: India Ratings and Research (Ind-Ra) has revised the outlook for (VDL) to stable from negative and in addition affirmed the corporate’s long-term issuer score.

The long-term issuer score of the corporate is ‘IND AA-‘. Instruments with score ‘IND AA’ carry very low credit threat.

“The outlook revision reflects the VDL group’s improved liquidity position, supported by the moderated refinancing risks at VRL (Vedanta Resources Ltd). The liquidity improvement resulted from VDL’s improved operational cash flows in 2HFY21, supported by its enhanced volume performance, cost improvements and a sharp recovery in metal prices,” Ind-Ra stated in an announcement this week.

However, Ind-Ra has stated that it believes regardless of VDL’s doubtless wholesome working efficiency over FY21-FY22, the group’s capacity to cut back debt will stay restricted, contemplating the substantial dividend money leakages within the present group construction.

This stays the important thing threat to VDL’s monetary flexibility regardless of the near-term enchancment within the total monetary leverage and easing off of refinancing dangers.

The group’s in-progress strategic plans to improve its fairness stakes in VDL may improve the group’s leverage over the quick time period. However, it might additionally cut back dividend money leakages and facilitate medium-term debt discount.

Ind-Ra will monitor such developments and consider the rankings based mostly on the contours of the financing and the construction, it stated.

Vedanta Ltd, a subsidiary of Vedanta Resources Ltd, is without doubt one of the world’s main diversified pure useful resource firms with enterprise operations in India, South Africa, Namibia, and Australia.

Vedanta is a number one producer of oil and gasoline, zinc, lead, silver, copper, iron ore, metal, aluminium and energy.

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