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Fitch Ratings has upgraded the issuer rating outlook on UK-based Vedanta Resources Limited to ‘Positive’ from ‘Stable’, underscoring improving credit fundamentals and balance-sheet strength, while affirming its issuer rating at 'B+'. The firm also affirmed the ‘B+’ rating on Vedanta Resources’ senior unsecured debt and the US dollar bonds issued by its subsidiary.

The upgrade reflects sustained deleveraging, strong commodity prices, benefits to Vedanta Resources, rising EBITDA, strengthening financial discipline, and the company's business profile, Fitch said.

This is Vedanta Resources' third outlook upgrade in a month. In December, two other global rating agencies - Moody’s and S&P upgraded their outlook on Vedanta Resources Ltd., the parent company of India’s Vedanta Ltd. Moody’s affirmed Vedanta Resources’ B1 corporate family rating. It also upgraded the outlook on the entity from ‘Stable’ to ‘Positive’.

According to Fitch, Vedanta Resources’ debt will further reduce for a sustained period. “The positive outlook reflects our estimate that VRL's proportionately consolidated EBITDA net leverage may reduce to around 3.2x or lower for a sustained period. This will be driven by our increased short-to-medium term commodity price assumptions for zinc, aluminium, and silver, the improving backward integration in VRL's aluminium business, and management commitment towards deleveraging,” the firm said.

Fitch has also emphasized Vedanta Resources' recent record of proactive refinancing, smoother debt maturities, lower borrowing costs, and reduced gross debt, which, according to the firm, signal a strengthening of financial discipline.

Vedanta Resources’ EBITDA is expected to rise to about $6 billion in the fiscal year ending March 2026, as well as in the fiscal year ending March 2027. As per Fitch, this will be supported by strong prices for Vedanta’s key commodities, healthy volume growth, and cost reduction at its aluminium operations. “Vedanta Resources commissioned a 1.5 million tonne per annum (MTPA) alumina refinery at Lanjigarh, Odisha in 2QFY26. It also plans to enhance captive bauxite and coal mining over FY27-FY28. The improved backward integration will reduce costs and add resilience to cash flows,” it said.

While strong earnings growth is expected over the next few fiscal years, Vedanta Resources will also be able to reduce its debt further. Fitch expects Vedanta’s proportionately consolidated EBITDA net leverage to fall to about 3.2x in the next few years, driven by strong operating cash flows. “The ratio reflects proportionate consolidation of Vedanta Resources’ operating subsidiaries (opcos) Vedanta Limited (effective ownership 56.4%), Hindustan Zinc Limited (35.8%), and Bharat Aluminium Corporation Limited (BALCO) (28.8%),” the firm said.

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