Global rating agency Moody's today revised mining major Vedanta's credit outlook to "negative" from "stable" citing adverse impact of weak commodity prices as a major factor for the downward revision.
The corporate family rating of Ba1 has been retained.
Moody's also said that the group's rating could face a downgrade due to many factors including depressed commodity prices.
"The outlook is negative reflecting the pressure on leverage arising from weak commodity prices and while measures to conserve cash may well be undertaken and aluminium and zinc output increase, the rate of decline in EBITDA (earnings before interest depreciation and amortisation) is likely to outpace reductions in debt," the rating agency said.
According to Moody's, the outlook could be stabilised if commodity prices recover or on the back of successful volume increases in the Indian zinc, aluminium and iron ore businesses.
"If the company is successful in preserving cash flow during the downturn by cutting capex", that could also help Vedanta's credit outlook, Moody's said.
Weak earnings from its oil and base metal businesses as a result of depressed commodity prices or material obstructions to production would put downward pressure on Vedanta's credit rating.
"The acquisition (if undertaken) of the Government of India's stake in Hindustan Zinc Ltd (HZL) fails to result in timely direct access to HZL's liquid assets," would also trigger possible downgrade.
At present, Moody's has affirmed its corporate family rating of Ba1 and its senior unsecured ratings of Ba3. 'Ba' generally refers to below-average creditworthiness compared to peers.
