The worst might be over for Vedanta Resources (VRL) but the London-headquartered firm would face funding shortfalls of $850 million in FY25 and $1.4 billion in FY26, according to a report by CreditSights.
“We continue to expect VRL’s funding access to remain constrained, interest burden to remain elevated, and the company to face funding shortfalls of $850 million (looks manageable) and $1.4 billion in FY25 and FY26, respectively,” it said.
The potential funding avenues that Vedanta could tap into include dividend upstreaming and brand fees from its Indian subsidiary and mining major Vedanta (VEDL) and its operating companies, asset and equity stake sales, or loans, it added.
Further, the firm’s “successful” bond restructuring has eased near-term debt refinancing risk, and the worst is over for VRL. The Anil Agarwal-group firm’s bonds had rallied since the restructuring approval by bondholders in January this year and there is limited upside in the bond prices, it added.
In January, VRL received bondholders’ approvals to extend the maturity period of four series of bonds worth $3.2 billion due in the next three years. The bonds are listed on the Singapore Exchange Securities Trading (SGX-ST).
On VEDL, in which VRL holds a 68.11% stake, CreditSights said that the company missed most of its FY24 production guidance with the exception of its India zinc and aluminium production. The company’s India zinc production was up 2% YoY, while international fell 24%. Its aluminium production rose 3% YoY across all its plants, while saleable iron ore and pig iron output rose 6% and 19% on YoY, respectively.