S&P raises long-term credit ratings on Tata Motors to ‘BB’ from ‘BB-‘
S&P Global Ratings has upgraded its long-term ratings on Tata Motors to speculative grade 'BB' with stable outlook on earnings improvements and potential deleveraging.
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New Delhi: S&P Global Ratings has upgraded its long-term ratings on Tata Motors to speculative grade 'BB' with stable outlook on earnings improvements and potential deleveraging.
The ratings agency had earlier placed Tata Motors in 'BB-'. As per S&P ratings, a BB grade is less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
Tata Motors cash flow should strengthen over the next 12-18 months on improving operating conditions in India and at its 100 per cent subsidiary, Jaguar Land Rover Automotive PLC (JLR), S&P Global Ratings said in a statement. "We therefore raised the long-term issuer and issue credit ratings on Tata Motors and its core subsidiary, TML Holdings Pte. Ltd., to 'BB' from 'BB-'," it added. The stable rating outlook reflects our view that Tata Motors' cash flow and leverage will steadily improve over the next 12-18 months, with support from improved operational performances, especially at JLR, the statement added. "We expect improved volumes, profitability, and positive working capital flow to support JLR's FOCF (free operating cash flow) in fiscal 2024 (year-end March 31, 2024), which may exceed £750 million," S&P said.
It further said, "this is despite our expectation that the company's capital expenditure (capex) could climb to about £3 billion. JLR's wholesale volumes could increase to 390,000-420,000 units in fiscal 2024."
