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BofA Positive on Vedanta Despite Viceroy Allegations
July 31, 2025
Bank of America (BofA) Global Research maintained a positive outlook on securities issued by Vedanta Resources Ltd (VRL) and its subsidiary Vedanta Ltd (VEDL), despite recent allegations by short seller firm Viceroy Research. Viceroy Research alleged that VRL was forced to refund INR 10.3bn ($123mn) to VEDL after regulatory scrutiny by the Enforcement Directorate (ED) in 2023. The refunded amount, labeled as “brand fee rebate”, was not disclosed to bondholders or the market, they claimed. These brand fees lacked commercial rationale, with $361mn paid in FY2025 alone to help service VRL’s debt and interest burden, Viceroy stated. Vedanta has strongly denied the allegations, calling them malicious and baseless. BofA also supported the legality and rationale of the brand fees, noting they comply with Indian regulations.
BofA’s positive outlook comes on the back of citing improvements such as reduced holding company liquidity risk, cheaper debt, and less reliance on dividends going forward. Key points from BofA’s report include:
- VRL’s debt is expected to reduce to $5.3bn by 2025, helped by dividends and brand fees from VEDL and a 12% stake sale in VEDL which reduced its ownership to 56.4%.
- Annual debt repayments are forecasted to decline to $450-650mn over the next three years, as recent refinancing and interest costs are expected to moderate from 14% in FY2025 to 11% in FY2026.
- Debt servicing needs are projected to fall from $1.8bn in FY2025 to $1.1bn in FY2026. VEDL’s free cash flow is expected to improve due to higher EBITDA driven by increased volumes and metal prices, which should reduce the group’s dependence on debt and stake sales.
BofA finds the yield curve of Vedanta’s securities attractive as compared to regional and emerging market peers. Vedanta’s dollar bonds were trading stable with its 11.25% 2031s at 104.35, yielding 10.29%.
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