S&P Global has revised its outlook on Vedanta Resources to positive from stable while reaffirming its B+ rating, citing stronger earnings visibility, continued cost reductions and supportive metal prices. Together, these factors are expected to bolster the company’s cash flows. Vedanta has tightened its cost structure, particularly in aluminium. The commissioning of a 1.5-million-tonne-per-annum alumina refinery at Lanjigarh has raised total capacity to 5 mtpa. S&P expects the new capacity to scale up over the next six months, delivering cost savings of about US$ 50 per tonne of aluminium. The company is also enhancing bauxite integration, with a ramp-up in mining operations over the next 12–18 months projected to lower production costs further. Vedanta is increasing the share of value-added products in aluminium and zinc, helping the company earn higher premiums over London Metal Exchange prices. S&P believes that lower costs and higher output will meaningfully lift earnings and strengthen credit metrics. The agency forecasts a 10 per cent rise in EBITDA in both FY26 and FY27. This could push Vedanta’s funds-from-operations (FFO) to debt ratio slightly above the 30 per cent upgrade threshold, compared with an estimated 24 per cent in FY26. The positive outlook reflects this expectation. While Vedanta’s credit profile has historically fluctuated with commodity cycles, S&P says deeper backward integration should soften volatility. However, delays in project ramp-up could strain the outlook given limited buffer in the FFO-to-debt ratio. Vedanta’s holding company debt has also become more manageable, with repayments of US$ 500–600 million due annually over the next three fiscal years. S&P expects these obligations to be met through brand fees of US$ 350 million and dividends of US$ 600–700 million from Vedanta Ltd — lower than the previously projected US$ 800 million dividend requirement for FY26. Recent refinancing and planned repayment of intercompany loans are expected to reduce borrowing costs further. Average interest expenses are projected at about US$ 450 million over the next two years, largely covered by brand fees, leaving most dividends available for debt reduction. S&P anticipates holding company debt to fall by US$ 500 million annually in FY27 and FY28. Although deleveraging has strengthened Vedanta’s capital structure, the agency warns that long-term financial health depends on reducing reliance on dividends and maintaining a self-sustaining funding model. Acquisition-led growth also presents risk, with Vedanta historically pursuing debt-funded expansion. The agency notes that while the company’s US$ 2 billion bid for Jaiprakash Associates fell through, future leveraged transactions cannot be ruled out. A rating upgrade is possible if Vedanta continues to reduce holding company debt, maintains FFO-to-debt above 30 per cent, successfully executes integration projects and improves its maturity profile while reducing reliance on dividends. The outlook could revert to stable if integration delays arise or if aggressive debt-funded expansion coincides with weaker cash flow. Shares of Vedanta Ltd closed 1.29 per cent higher at Rs 532.80 on Monday and have gained 20 per cent so far in 2025.