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This article is more than 8 month old.

Vedanta will clock $2.5 bn of free cash flow in FY22: S&P Global

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S&P Global Ratings has stated that Vedanta Resources Ltd is likely to have a strong operating performance of its subsidiary Vedanta Ltd which will strengthen its ability to meet debt maturities until at least June 2022.

Vedanta will clock $2.5 bn of free cash flow in FY22: S&P Global

S&P Global Ratings has said that Vedanta Resources Ltd is likely to have a strong operating performance of its subsidiary Vedanta Ltd which will strengthen its ability to meet debt maturities until at least June 2022.

The rating agency also forecast that based on the company's operational and capital expenditure guidance Vedanta Ltd will generate a solid consolidated free operating cash flow of about US $2.5 billion in the fiscal year 2022. The strong commodity prices will support Vedanta Ltd's robust performance, which will in the end improve the company's ability to pay dividends to Vedanta Resources and help it in refinancing, the rating agency said.

The global rating firm said that Vedanta Resources will pay off debt maturities of about US $550 million (including intercompany loans) in the quarter ending June 2021, using part of the proceeds of its US $1.2 billion bond issued in February 2021.

The rating agency also expected the company to use a combination of refinancing at Vedanta Resources and dividends from Vedanta Ltd to meet debt maturities of about US $1.4 billion between July 2021 and June 2022, leaving US $1 billion of bonds due in July 2022 and about US $900 million of loans due in the rest of the fiscal year 2023.

The rating agency believed Vedanta Resources will proactively refinance the July 2022 bond, as it did with the US $670 million bonds due in June 2021 and the current operating momentum and recent tightening in yields on the company's bonds are supportive of such issuance.

The agency expected despite potentially sizable dividend payments in the fiscal year 2022 Vedanta Ltd will maintain good liquidity given its free cash flows. The company reported consolidated cash of about US$4.4 billion as of March 31, 2021, including about US $3.0 billion at its 65 percent subsidiary Hindustan Zinc Ltd.

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