Vedanta Initiates ₹4,100 Crore Bond Offering to Raise Funds

Mining major Vedanta Ltd has initiated a fresh fundraising exercise through unsecured non-convertible debentures (NCDs) worth ₹4,100 crore, aiming to bolster its balance sheet and finance its ongoing capital expenditure (capex) projects. Sources indicate that the company is using this bond issue strategically to reduce existing debt and support general corporate operations.

Greenshoe Option Could Push Total Fundraising to ₹5,000 Crore

According to the placement memorandum, the base issue size is set at ₹4,100 crore, with an additional greenshoe option of ₹900 crore. If fully subscribed, this could bring the total fundraise to ₹5,000 crore. The funds will be deployed toward debt prepayment, capital investments, and other operational needs.

Strong Cash Flows and Investor Confidence Back the Issue

Vedanta has emphasized its robust cash flows and growth pipeline to attract investor interest. The company has already secured anchor investors for all three tranches of the NCD issue. These investors include some of the biggest names in the Indian financial ecosystem, signaling strong confidence in the company's fundamentals.

Anchor Investors for Series-Wise Allocation

• Series 1: Base size of ₹2,250 crore with a ₹750 crore greenshoe. Major anchor investors include:

  • ICICI Prudential Mutual Fund

  • Aditya Birla Sun Life Mutual Fund

  • Kotak Mahindra Mutual Fund

  • Axis Mutual Fund

• Series 2: Base size of ₹1,000 crore with a ₹750 crore greenshoe. Backed by:

  • Reliance General Insurance Company

  • Two additional financial institutions

• Series 3: Carries a base size of ₹850 crore

Second NCD Issuance by Vedanta in 2025

This marks Vedanta’s second NCD offering in 2025, following its ₹2,600 crore issuance in February, which offered coupon rates between 9.40% and 9.50%. That issue also attracted marquee institutional investors such as Nippon India, Axis, and Kotak, further validating the company’s appeal in the debt market.

CRISIL Assigns 'AA' Rating with Watch Status

Credit rating agency CRISIL has assigned a ‘AA’ rating to the current NCDs, though it is placed under “Rating Watch with Developing Implications.” This reflects a mixed outlook — while the fundamentals remain strong, market and execution risks persist.

CRISIL noted that Vedanta’s EBITDA is likely to improve in FY26, despite a 5–10% softening in commodity prices. This projection hinges on the successful completion of several capex initiatives focused on capacity expansion and efficiency enhancements, particularly in the aluminium segment.

Key Drivers Behind CRISIL’s Positive Outlook

The agency highlights:

• Vedanta’s diversified commodity portfolio

• Strong financial flexibility

• Promoters’ commitment to reducing debt

• A material decline in refinancing risks at the parent entity, Vedanta Resources

It expects EBITDA gains to fund capex and ensure timely debt servicing, thereby strengthening the company’s credit profile in the medium term.

Future Growth to Be Led by Aluminium and Zinc Segments

Vedanta’s asset-heavy approach and multi-commodity strategy are expected to deliver margin expansion and higher cash generation. The company’s capex focus on zinc and aluminium is anticipated to yield stronger EBITDA margins, supporting both growth and deleveraging goals.

CRISIL added that sustaining this projected EBITDA ramp-up, especially in the face of commodity market volatility, will be crucial for maintaining current credit ratings.

20% EBITDA Growth Forecast for FY26

In its Q4 earnings call, Vedanta forecasted a 20% increase in EBITDA, fueled by:

• 10% rise in production volumes

• 10% savings through cost reductions and marketing premiums

This growth outlook further reassures investors and rating agencies about the company’s forward momentum.

Subscription Deadline

Investors interested in participating in the NCD issuance should note that the offer closes on June 4, 2025.