Vedanta Raising Rs 5,000 Crore Through NCDs for Debt Repayment and Capex
Vedanta announces bond offering to secure funds worth approximately 41 billion Indian rupees
Mining conglomerate Vedanta Ltd is diving headfirst into raising ₹5,000 crore via unsecured non-convertible debentures (NCDs) to settle outstanding debts and cover capital expenditure needs. That's right, a massive round of borrowing!
At the core of this fundraising effort is a base issue of ₹4,100 crore, bolstered by a greenshoe option worth an additional ₹900 crore. The plan, as per the placement memorandum, is to use the funds for various corporate purposes, including debt repayment or prepayment, and meeting capex requirements.
Who's eager to hop on this debt train? Well, Vedanta has already secured the interest of big fish like ICICI Prudential MF, Aditya Birla Sun Life MF, Kotak Mahindra MF, and Axis MF, to name a few. Meanwhile, Reliance General Insurance Company and two other financial institutions have parked their money in the Series -2, with a base issue size of ₹1,000 crore and a greenshoe option of ₹750 crore. A third series, with a base size of ₹850 crore, is also on the cards.
It's worth mentioning that this is Vedanta's second NCD issuance in 2025. Back in February, the company raked in ₹2,600 crore through unsecured NCDs at a coupon rate of 9.40-9.50%.
CRISIL has given this NCD issuance a rating of 'AA', and has highlighted a few key factors such as expected improvement in Vedanta's FY26 EBITDA, the commitment of the promoters to deleveraging, reduced refinancing risk at Vedanta Resources, Vedanta's presence in diverse commodities, and the company's financial flexibility.
So, what does all this mean for Vedanta's financial future? CRISIL expects Vedanta's EBITDA to increase further in FY26, despite a potential 5-10% drop in commodity prices. The increased EBITDA will be instrumental in supporting ongoing capex and scheduled debt repayment over the medium term. With a strong asset base, a multi-commodity presence, and planned growth and efficiency improvement capex, especially in the aluminium and zinc sectors, Vedanta is poised to maintain its margin profile and EBITDA levels.
But remember, the volatile nature of commodity prices can be a double-edged sword. While a continued increase in EBITDA to expected levels will be crucial for maintaining a healthy rating, it also signifies a key sensitivity factor. Commodity prices might fluctuate more than a cryptocurrency in a cattle market!
All in all, Vedanta is riding the wave of debt to shore up its finances and keep the mining machinery humming. The NCD issue closed on June 4. Your move, stock market!
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Resource:
- Livemint
- Business Standard
- The Economic Times
- Zee Business
- Moneycontrol
- Vedanta Ltd, a mining conglomerate, is venturing into the financial market by issuing unsecured non-convertible debentures (NCDs) worth ₹5,000 crore, aiming to repay debts and finance capital expenditure.
- In the ongoing NCD issuance, major financial institutions like ICICI Prudential MF, Aditya Birla Sun Life MF, Kotak Mahindra MF, and Axis MF have indicated interest, signaling a potential flood of funds for Vedanta Ltd.
- The debt-raising drive by Vedanta Ltd is not new, as it previously secured ₹2,600 crore through an NCD issuance in 2025, demonstrating the company's reliance on financing for its operations and expansions in the mining sector.
