Tata Motors shares in focus as Moody's ups credit ratings for Tata group firm, Jaguar Land Rover Automotive

Shares of Tata Motors Ltd will be in focus on Friday morning after Moody's, a global rating agency, upgraded the credit rating of the automaker and one of its wholly-owned subsidiaries Jaguar Land Rover Automotive Plc to Ba3 from B1 while maintaining the outlook on both the entities ‘positive’. Tata Motors informed stock exchanges about the rating change overnight.

The rating upgrade was seen amid a continued improvement in Tata Motors' profitability and free cash flow, which has helped the automaker cut borrowings despite high capital expenditure. The rating, Moody's said, is underpinned by Tata Motors' conservative financial policies that balance growth with prudent debt management. This, Moody's said, would support a further improvement in Tata Motors credit profile over the coming 12 to 18 months.

Tata Motors stays focused on achieving a net zero automotive debt target by March 2025, Moody's said adding that the JLR-owner would reduce its gross debt by almost 30 per cent by March 2024 from March 2022 levels.

Moody’s said Tata Motors would sustain the improvement in all of its automotive operations namely commercial vehicle (CV) and passenger vehicle (PV) business in India, collectively referred to as Tata Motors India and its global premium passenger car business through the British wholly-owned subsidiary Jaguar Land Rover Automotive Plc.

To recall, Moody's Investors Service had recently upgraded the corporate family rating of Tata Power Ltd to Ba1 from Ba2 while maintaining its stable outlook. The rating upgrade to Ba1 was driven by Tata Power's "solid financial metrics" that Moody's said are projected to remain above the upgrade trigger set for the earlier Ba2 rating.

For Tata Power, Moody's said the company's standalone credit quality was supported by predictable cash flow from its distribution businesses, which benefit from a stable regulatory framework and also from fixed-tariff long-term power purchase agreements (PPAs) for the renewable generation capacity.

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