Tata Motors' balance sheet seen cushioning impact of CV business demerger, Iveco buyout: S&P
' strong balance sheet will help absorb the impact of its planned commercial vehicle (CV) business demerger and the risks tied to its proposed acquisition of Italy's
Iveco Group
, according to
S&P Global Ratings
.
In a statement on Thursday, the ratings agency said the company's credit profile is evolving amid slowing demand, tariff uncertainties, and structural changes, but its financial strength remains intact, as per news agency
PTI
.
'The
Iveco acquisition
will not affect our rating on Tata Motors (BBB/Stable/--). This is because the rated entity will only house the passenger vehicles business after the demerger,' S&P said, adding that the split is likely to conclude soon.
Under the plan, a new entity will hold the CV business and acquire Iveco—excluding its defence operations—for EUR 3.8 billion (about ₹38,240 crore) in what will be Tata Motors' largest-ever acquisition. The deal is expected to close by April 2026.
S&P outlook
S&P called the acquisition 'strategic,' saying it would double the group's CV revenue and EBITDA from FY26 levels, take annual CV revenue to about $ 25 billion, and improve geographic diversity with a stronger footprint in Europe and Latin America. However, it noted that Iveco is not a market leader in its key markets and offers limited direct synergies with Tata's current CV portfolio.
The agency also cautioned that Iveco's acquisition will add debt to the CV business, with the treatment of Iveco's asset-backed securitisation of receivables a key factor in assessing its financial health.
On the passenger vehicles side, including
Jaguar Land Rover
(JLR), S&P expects performance to remain weak through FY26 amid geopolitical headwinds, although higher realisations could cushion revenue pressures.
Despite these challenges, S&P said Tata Motors' debt-reduction efforts over the past two years will provide a buffer, estimating the ratio of funds from operations to debt will stay above 100 per cent over the next 12–24 months—well above its 40 per cent downgrade trigger.
The stable rating outlook reflects expectations of a strong balance sheet, sound operations, and continued progress at JLR, including the launch of its first electric Range Rover by year-end.
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