Tata Motors shares in focus after Moody's affirms Ba1 rating; upgrades Jaguar Land Rover's credit outlook
Tata Motors shares
will be in focus on Monday after Moody's Ratings affirmed the automaker's
Ba1 corporate family rating
(CFR) with a positive outlook, while upgrading the ratings of its UK-based subsidiary, Jaguar Land Rover Automotive Plc (JLR).
Moody's raised JLR's corporate family rating to Ba1 from Ba2 and its probability of default rating (PDR) to Ba1-PD from Ba2-PD, reflecting the improving credit profile of both Tata Motors and its luxury vehicle arm.
"The affirmation reflects the sustained strengthening in TML's consolidated credit profile driven by gross debt reduction and earnings expansion, which are accelerating deleveraging even as the global automotive industry faces challenging conditions," says Kaustubh Chaubal, a
Moody's Ratings
Senior Vice President.
"Concurrently, we have upgraded JLR's backed senior unsecured instrument ratings to Ba1 from Ba2. The outlook remains positive," a company filing said, quoting the rating agency.
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According to Moody's Ratings, Tata Motors Ba1 Corporate Family Rating (CFR) is a reflection of several key credit strengths. The rating agency highlights TML's robust global presence in the luxury automotive segment through its wholly-owned subsidiary, Jaguar Land Rover Automotive Plc (JLR, Ba1 positive). Moody's also points to TML's leading market position in India across commercial vehicles (CVs) and its growing share in passenger vehicles (PVs).
Furthermore, Moody's credits TML's commitment to creditor-friendly financial policies that effectively balance growth with financial discipline, thus supporting a solid credit profile. The rating agency also acknowledges a long-standing, strategically important relationship with its parent, Tata Sons. This relationship, according to Moody's, results in a one-notch uplift to TML's rating due to the expectation of extraordinary support, should it be required.
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Moody's also notes that TML is currently in the process of demerging its CV operations into a separately listed entity with mirror shareholding. Post-demerger, which Moody's expects to be effective in October, the rated entity will encompass all PV and PV-related businesses, including 100% ownership of JLR. The rating agency anticipates that following this transaction, JLR will contribute over 90% of TML's consolidated EBITDA, underscoring the increasing convergence of their credit fundamentals. ..
Tata Motors
shares have declined 28% over the past 12 months, though they have gained 75% over the last three years. The company's current market capitalisation stands at Rs 1,48,943 crore.
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