Live Markets »News & Advice»Market News»Market News Details
Market News Details
Back

Moody's downgrades Tata Motors rating to Ba2 with a stable outlook

Press Trust of India/New Delhi 13 Jul 18 | 06:34 PM

Global rating agency Moody's today said it has downgraded the corporate family rating on Tata Motors due to the weakening credit metrics at Jaguar Land Rover (JLR).

Moody's Investor Services has downgraded Tata Motors rating to Ba2 with a stable outlook. Earlier, the agency had a Ba1 rating on the company.

Related Stories

    No Related Stories Found
Widgets Magazine

"The downgrade to Ba2 reflects our expectation of continued weakness in Tata Motors consolidated credit metrics over the next two years, led by its wholly-owned subsidiary JLR Automotive Plc," Moody's Vice President and Senior Credit Officer Kaustubh Chaubal said in a statement.

Although JLR accounted for 48 per cent of Tata Motors Ltd (TML) group's unit sales in 2017-18, it generated 78 per cent and 76 per cent respectively of the company's reported consolidated revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) for the automotive business, Moody's said.

"Given this large contribution, weakening credit metrics at JLR have a direct and immediate impact on TML's consolidated results," it added.

Moody's said that TML's consolidated adjusted debt/EBITDA is likely to remain elevated over the 12-18 months.

At the same time, large capital and product development expenditure at JLR of GBP4.5 billion annually will keep free cash flows negative, it added.

"Moreover, Moody's also expects that rising commodity prices and a challenging operating environment for JLR will keep TML's EBITDA margins below 3 per cent," the rating agency said.

Meanwhile, TML's ex-JLR operations, in particular the India business, will continue to improve on the back of favourable industry dynamics, the company's upcoming product launches and focus on cost rationalisation measures, it added.

Widgets Magazine

Sensex

Company Price Gain (%)
O N G C162.904.36
Asian Paints1,389.900.87
H D F C2,006.000.80
Bajaj Auto3,115.000.64
Hero Motocorp3,499.100.56

Poll

Currently No Poll Available.

Online Portfolio

You can create Online Portfolio here using the below button.

Widgets Magazine