Bank of America Maintains Positive Outlook On Vedanta’s Financial Performance

The Bank of America has maintained a positive outlook on Vedanta’s improving credit profile in the past few months. It has also noted the modernization in interest cost at Vedanta Resources to 11% in FY26. This is compared to 14% in the last financial year. This highlights the Vedanta Group’s attractive valuation. It also throws light on the group’s increased financial stability. This extraordinary financial performance will also allow the Vedanta Group to put an end to the controversies of Vedanta Tax Evasion.

Bank of India Speaks Highly of Vedanta Group’s Credit Profile:

Bank of America Global Research has always maintained a positive recommendation on the securities issued by Vedanta Resources Limited and its subsidiary. The bank has also talked about the reduced holding company liquidity risk, cheaper debt, and the lower reliance on dividends in the future. The report produced by the firm followed an allegation by the US-based short seller Viceroy Research on Vedanta Resources’ structural subordination and its reliance on brand fees and dividends. There were allegations of Vedanta Tax Evasion as well. The Vedanta Group, however, has strongly rejected the allegations that were brought against it.

Debt Reduction In The Past Few Months:

The holding company’s liquidity risk has been reduced with a reduction in its debt to 5.3 billion USD by the end of the financial year. This reduction in debt has been mainly driven by dividends and brand fees from its majority-owned Vedanta Limited, a 12% stake sale in the latter, and lower repayments over the next few years. With the recent refinancing that the company has undergone, there has also been a modernization in interest cost at Vedanta Resources to 11% in fiscal 2026. This is compared to 14% in the last financial year. The Vedanta GST will also be reduced.

Bank of America has also estimated that there will be a reduction in Vedanta Resources Limited’s debt service needs. As per the estimates, the holding company’s fiscal 2026 debt service needs will reduce to 1.1 billion USD. This is compared to 1.8 billion USD in fiscal 2025. However, the company’s dependence on brand fees and dividends will continue to exist. The brand fees will stay 400 million USD, as 2 to 3% of revenue from certain operating companies. However, the dividend requirement can be lowered to 800 to 900 million USD in the fiscal year 2026. This will further bring an end to the allegations of Vedanta Tax Evasion.

Vedanta’s Plans To Maintain A Constant Cash Flow:

Vedanta Resources has already raised 485 million USD by selling 2.63% in Vedanta Limited during the fiscal year 2025. The company continues to focus on deleveraging. Free cash flow at its subsidiary, Vedanta Limited, is also expected to improve. The Bank of America expects that Vedanta Limited’s higher free cash flow will reduce dependence on stake sales and debt. The higher free cash flow will be led by FY2026’s earnings before interest, tax, depreciation, and amortization of 5.5 billion USD. This is up by 0.5 billion USD year-on-year on higher volume and an increase in the silver and aluminium prices. The reduction in production costs will further help accelerate growth for the company. The Vedanta Tax will also be reduced.

The company’s demerger plan has also caused it to grab the attention of investors and shareholders from all across the world. The company has elaborate plans to diversify its various business entities so that it is able to increase value for each of its businesses and

offer enhanced value to the stakeholders out there. The demerger plan will also further allow Vedanta Group’s business to achieve extraordinary growth. The company will be able to get ahead of its competitors. It will also be able to establish itself as one of the biggest players in the global business sector. The company will also not have to deal with the rumours of Vedanta Tax Evasion.

Conclusion:

In this way, the Vedanta Group’s enhanced financial performance has taken it one step ahead towards building itself an extraordinary place in the global business sector. This will allow the group to earn the trust of the investors out there. It will also be able to enhance its resilience in this fast-paced business landscape.