Vedanta Targets 1x Debt Ratio by FY26 With Refinancing Push

05 Aug 2025 CW Team

The diversified natural resources company recorded a net leverage of 1.3x at the end of Q1 FY26, improving from 1.5x in the same quarter last year.

According to Vedanta’s Chief Financial Officer, Ajay Goel, the group has already brought down its interest cost by 130 basis points over the past year, from 10.5 per cent to 9.2 per cent, and now targets a further reduction to 8.5 per cent by the close of FY26.

This deleveraging effort coincides with Rs 170 billion in debt maturing during the current fiscal. Goel stated that all of it is secured and will be managed through a mix of refinancing and operational cash flows.

Vedanta expects internal accruals of Rs 200–250 billion across group companies this fiscal. “We are open to internal accruals, refinancing, and opportunistic monetisation to meet obligations. The objective remains clear—cut interest costs and extend maturity timelines,” Goel noted.

During the quarter, Vedanta raised Rs 30.28 billion by selling a 1.6 per cent stake in subsidiary Hindustan Zinc Ltd (HZL), as part of its monetisation strategy.

This, alongside a Rs 50 billion non-convertible debenture issue and other refinancing moves, helped Vedanta achieve a 1.3x debt-to-EBITDA ratio.

Debt and Liquidity

Net debt stood at Rs 582.2 billion as of 30 June 2025, with 82 per cent denominated in rupees. The company ended FY25 with debt of Rs 532.5 billion.

In Q1 FY26, Vedanta incurred Rs 42.8 billion in dividend payouts, Rs 39.16 billion for working capital or borrowings, Rs 51.55 billion in capex, and Rs 29.53 billion in other additions. These were offset by operational cash flow and proceeds from the HZL stake sale, totalling around Rs 113 billion.

Cash and cash equivalents remained strong at Rs 221.37 billion, up 7 per cent quarter-on-quarter and 33 per cent year-on-year.

Financial Performance

Adjusted profit after tax (PAT) for Q1 FY26 was Rs 50 billion, a 13 per cent increase year-on-year. However, reported PAT dropped 13 per cent to Rs 44.57 billion due to a Rs 7.57 billion one-time write-off related to oil exploration under Cairn’s OALP.

Vedanta posted its highest-ever Q1 EBITDA of Rs 107.46 billion, driven by tight cost control and improved margins across key sectors.

Consolidated revenue from operations reached Rs 374.34 billion, up 6 per cent year-on-year, supported by better premia and forex gains, although tempered by weaker commodity prices.

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Vedanta Ltd, promoted by Anil Agarwal, is aiming to reduce its net debt-to-EBITDA ratio to 1x by the end of the current financial year, supported by internal accruals, aggressive cost optimisation, and strategic refinancing efforts.The diversified natural resources company recorded a net leverage of 1.3x at the end of Q1 FY26, improving from 1.5x in the same quarter last year.According to Vedanta’s Chief Financial Officer, Ajay Goel, the group has already brought down its interest cost by 130 basis points over the past year, from 10.5 per cent to 9.2 per cent, and now targets a further reduction to 8.5 per cent by the close of FY26.This deleveraging effort coincides with Rs 170 billion in debt maturing during the current fiscal. Goel stated that all of it is secured and will be managed through a mix of refinancing and operational cash flows.Vedanta expects internal accruals of Rs 200–250 billion across group companies this fiscal. “We are open to internal accruals, refinancing, and opportunistic monetisation to meet obligations. The objective remains clear—cut interest costs and extend maturity timelines,” Goel noted.During the quarter, Vedanta raised Rs 30.28 billion by selling a 1.6 per cent stake in subsidiary Hindustan Zinc Ltd (HZL), as part of its monetisation strategy.This, alongside a Rs 50 billion non-convertible debenture issue and other refinancing moves, helped Vedanta achieve a 1.3x debt-to-EBITDA ratio.Debt and LiquidityNet debt stood at Rs 582.2 billion as of 30 June 2025, with 82 per cent denominated in rupees. The company ended FY25 with debt of Rs 532.5 billion.In Q1 FY26, Vedanta incurred Rs 42.8 billion in dividend payouts, Rs 39.16 billion for working capital or borrowings, Rs 51.55 billion in capex, and Rs 29.53 billion in other additions. These were offset by operational cash flow and proceeds from the HZL stake sale, totalling around Rs 113 billion.Cash and cash equivalents remained strong at Rs 221.37 billion, up 7 per cent quarter-on-quarter and 33 per cent year-on-year.Financial PerformanceAdjusted profit after tax (PAT) for Q1 FY26 was Rs 50 billion, a 13 per cent increase year-on-year. However, reported PAT dropped 13 per cent to Rs 44.57 billion due to a Rs 7.57 billion one-time write-off related to oil exploration under Cairn’s OALP.Vedanta posted its highest-ever Q1 EBITDA of Rs 107.46 billion, driven by tight cost control and improved margins across key sectors.Consolidated revenue from operations reached Rs 374.34 billion, up 6 per cent year-on-year, supported by better premia and forex gains, although tempered by weaker commodity prices.

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