Vedanta shares in focus on Thursday after ICRA upgrades long-term credit rating to AA; stock up 78% YTD

Shares of Anil Agarwal-led Vedanta will be in focus during Thursday's trading session after credit rating agency ICRA said on Wednesday that it has upgraded the mining major's long-term credit rating over its strengthened credit profile. ICRA has upgraded the metals-to-mining conglomerate's long-term credit rating to AA from AA-. 

ICRA said the long-term rating upgrade considers an expected improvement in the company's credit metrics following the successful fund-raising of $1 billion via a qualified institutional placement (QIP) in July and an additional $400 million generated from the offer for sale (OFS) of Hindustan Zinc Ltd in August.

Also Read: Vedanta board to consider third interim dividend for FY25 on September 2: Record date fixed

This upgrade comes amid significant developments at Vedanta Group that focus on long-term strategic growth and financial strength. Vedanta Ltd. has built a war chest exceeding ₹22,000 crore, comprising mainly existing cash reserves, stake sales, and dividends from its subsidiary Hindustan Zinc Ltd.

Vedanta Resources Ltd is also actively pursuing refinancing a substantial portion of its outstanding bonds, aiming to further lower the consolidated entity's interest costs. ICRA said all the deleveraging efforts are also expected to improve the group's overall financial flexibility.

Vedanta share price trend

Vedanta shares have risen 78 per cent year-to-date (YTD). According to Trendlyne data, Vedanta has provided 68.23 per cent returns to investors in the last six months, compared to Nifty 50's returns of 12.6 per cent during the period. In the last one year, Vedanta has given 94.52 per cent returns.

Also Read: Vedanta says will continue to cut costs to boost margins as Q1 profit soars

On Wednesday, September 4, shares of Vedanata opened at ₹461 and hit an intra day high of ₹462.90 against a 52-week high of ₹506.85, before settling 1.12 per cent lower at ₹459.25 apiece on the BSE. The mining company commands a market capitalisation of ₹1,79,584.57 crore.

Vedanta dividend history

Vedanta's board approved the issue of an interim dividend for the third time in the financial year 2024-25. The mining major declared an interim dividend of ₹20 per equity share on the face value of ₹1 per share for the financial year 2024-25. The total value of the dividend issue amounts to ₹7,821 crore.

Vedanta Ltd. approved a second interim dividend of ₹4 per share for the current fiscal year in July. In May, Vedanta Ltd. also approved its first interim dividend of ₹11 per share. The record date for the first interim dividend was Saturday, May 25, 2024.

Vedanta Ltd issued dividends close to ₹101.4 a share in FY23 and ₹29.5 per share in FY24, leading to handsome dividend yields for investors and Vedanta's parent (Vedanta Resources), which holds more than 56 per cent of the company's shares.

Also Read: Vedanta board announces third interim dividend of FY25 at ₹20 per share

Vedanta Q1 Results

During the April-June quarter, cost reduction helped the company clock a 54 per cent year-on-year growth in its consolidated net profit at ₹5,095 crore. The consolidated revenue grew six per cent during this period to ₹35,239 crore. The company’s net debt grew to ₹61,324 crore as of 30 June, compared to ₹56,338 crore at the end of March. 

However, the net debt to EBITDA ratio remained stable at 1.5 times annualised. "Aluminium and zinc divisions continue to outperform industry benchmarks, consistently ranking in the top quartiles and deciles of the global cost curve. These achievements are a direct result of our strategic focus on cost, as reflected in a 20 per cent year-over-year reduction in overall Cost," said Arun Misra, Executive Director, Vedanta Ltd.