Ind-Ra revises outlook on Vedanta to stable

Ind-Ra revises outlook on Vedanta to stable

India Ratings and Research (Ind-Ra) has revised Vedanta’s outlook to stable from negative while affirming the long-term issuer rating at IND AA.

The rating agency has revised ratings on Vedanta’s Rs 5,700 crore non convertible debentures, Rs 500 crore project finance facilities and its Rs 4,620 crore term loans.

The outlook revision to stable reflects the completion of the merger of Cairn India with Vedanta, within the timelines envisaged by the latter.

This merger gives Vedanta access to Cairn India’s cash reserves and provides greater financial flexibility to Vedanta to deleverage its consolidated balance sheet, the agency said.

The stable outlook also factors in the improvement in the credit metrics due to cost efficiencies, improved commodity prices and higher volumes. Ind-Ra expects the consolidated net leverage levels to decline further in FY18 on a recovery in commodity prices and EBITDA from new capacities.

In FY17, Vedanta’s consolidated net leverage (adjusted consolidated net debt/EBITDA), inclusive of its parent’s (Vedanta Resources) debt, declined to three times from four times in FY16. At FY17, Vedanta’s gross debt  was $19.3 billion while cash was $9.7 billion.

India Ratings also believes that Vedanta would have refinancing opportunities as well. “Ind-Ra believes that Vedanta’s debt servicing will draw comfort from the cash available with Cairn India and its healthy operating EBITDA,” Ind-Ra said.