Vedanta Ltd. to Raise Up to ₹3,000 Crore via NCDs, Further Strengthening Capital Structure

Vedanta Ltd. has announced that its Committee of Directors has approved raising up to ₹3,000 crore through Non-Convertible Debentures (NCDs) on a private placement basis. The objective of this fundraising exercise is to further strengthen the company’s capital structure and optimize its borrowing costs.

In an exchange filing, the company stated that it will issue a maximum of 300,000 unsecured, rated, listed, and redeemable NCDs, each having a face value of ₹100,000, aggregating to a total amount of ₹3,000 crore. These NCDs will be listed on the Bombay Stock Exchange (BSE).

The debt instruments and bonds previously issued by the company have received a robust response from investors. A $500 million bond issue in October 2025 was oversubscribed three times, while an NCD issue launched in June of the previous year received an oversubscription of approximately 60 percent.

The company continues to maintain access to both domestic and international debt markets. While support for NCDs and bank funding remains steady, interest from foreign lenders has also been observed in refinancing transactions under the revised External Commercial Borrowing (ECB) norms. Domestic NCDs, bank loans, ECBs, and US Dollar bonds collectively provide diversified sources of capital, enabling the company to maintain financial flexibility and a strong balance sheet.

This development comes at a time when the group is gradually reducing debt from its balance sheet and refinancing existing borrowings to lower its overall cost of debt. According to a recent exchange filing, Vedanta Limited’s Net Debt-to-EBITDA ratio has declined from 1.40x in Q3 FY25 to its current level of 1.23x, with a target set to bring it below 1x in the near future.

At the Vedanta Resources level, this ratio has decreased from 3.3x in FY20 to approximately 1.9x currently. The improvement in the Net Debt-to-EBITDA ratio reflects a strengthening of the balance sheet and an enhanced capacity to repay debt using operational earnings. The Net Debt of the parent company, Vedanta Resources (excluding Vedanta Limited), has also come down from approximately US$ 8.9 billion in March 2022 to approximately US$ 4.8 billion as of December 31, 2025.

Investor interest remains sustained at a time when operational performance across various business verticals is witnessing improvement, bolstered by higher production volumes, cost efficiencies, and favorable commodity trends. The proposed demerger—now nearing completion—is also being viewed by analysts as a structurally positive step toward long-term value creation.

Parallel to its deleveraging initiatives, Vedanta Limited plans to undertake capital expenditure (Capex) of approximately ₹40,000 crore over the next few years. The objective is to consolidate its market-leading position, scale up its EBITDA to approximately US$ 10 billion, and achieve a Compound Annual Growth Rate (CAGR) of 18% in EBITDA over the near term. According to the company’s recent exchange filing, out of the total approved Capex of approximately ₹75,000 crore (valid through September 2025), around ₹35,000 crore has already been expended, while the remaining amount is slated to be spent over the coming years. The commissioning of major projects across the aluminum, zinc, oil and gas, iron ore, steel, and energy sectors is scheduled for the next two financial years.

Research institutions and financial firms maintain a positive outlook regarding Vedanta Limited. BofA Securities has upgraded the company’s rating to “Buy,” citing a strong outlook for aluminum, favorable silver prices, and a healthy dividend yield. In its report, BofA Securities stated, “Significant deleveraging at the parent company level mitigates the risk of an increase in brand fee rates or inter-corporate lending.” The firm has raised its target price from ₹480 to ₹840, implying a potential upside of 75%.

BofA Securities noted, “We have raised our EBITDA estimates for FY26E–FY28E by 16–21%, incorporating higher aluminum forecasts, an increased fair value for Hindustan Zinc, a decline in the US Dollar–Indian Rupee exchange rate (rupee depreciation), and the group’s robust balance sheet—specifically by reducing the holding company discount from 15% to 5%.” Furthermore, BofA Securities has projected that Vedanta Limited’s operating cash flow for FY27 could grow by 31% year-on-year.