Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Credit rating agency Crisil has revised miner Vedanta Limited’s rating outlook to Negative from Stable for non-convertible debentures (NCD) and long-term bank facilities, while the agency has reaffirmed its CRISIL AA rating for the same. Vedanta’s commercial paper and short-term bank facilities have been reaffirmed the rating of CRISIL A1+.


For FY2021, Vedanta’s operating profitability is expected to improve driven by increased volumes in zinc and oil and gas segment, according to Crisil. In the aluminium segment, the agency expects earnings improvement due to lower alumina costs and cost savings aided by long-term contracts for bauxite and coal linkages. 


Crisil cited that in FY2020, the company’s earnings (EBITDA) have moderated driven by lower aluminium and zinc prices and delays in ramp-up of zinc and oil and gas business segment. 


The rating revision factors the risk of a sharper decline in commodity prices, including Brent crude, aluminium and zinc in FY2021 due to the COVID-19 pandemic and resultant lower profitability in the fiscal. Also, supply chain disruptions could impact the company’s sales volumes, if the virus pandemic prolongs. Delay in refinancing upcoming maturing debt and higher dividend payouts by Vedanta are considered key sensitivity factors, cited Crisil in its rating rationale.  

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