Ratings agency Moody's on November 9 upgraded Tata Motors Limited's corporate family rating (CFR) to Ba3 from B1.
Concurrently, Moody's has also upgraded Tata Motors senior unsecured instruments ratings to Ba3 from B1. It has maintained positive outlook on all ratings.
As per the statement, Moody's also upgraded Jaguar Land Rover (JLR) corporate family rating (CFR) to Ba3 from B1 and the probability of default rating (PDR) to Ba3-PD from B1-PD. It has upgraded JLR's backed senior unsecured global notes to Ba3 from B1. The outlook on all ratings remains positive.
"The upgrade of JLR's ratings to Ba3 with positive outlook reflects the company's strong operating performance over the past 12 months which has led to a significant improvement in credit metrics," Moody's said in a release.
JLR has gradually ramped up its production volumes over the past four quarters as supply chain constraints subsided, leading to a nearly 25% percent growth in rolling 12 months wholesale volumes which have grown to 364k units at the end of September 2023, from just 293k in the prior year period.
Moody's forecasts wholesales to increase further to at least 400k by financial year-end 31 March 2024, as the company has previously indicated. Sales continue to be backed by a strong order book, which at the end of September consisted of 168k new vehicles to be delivered, 77 percent of which were Range Rover, Ranger Rover Sport and Defender models.
Commenting on Tata Motors, Moody's underlined that the automaker remains focused on achieving its net zero automotive debt target by March 2025. Moody's estimated that Tata Motors will reduce its gross debt by almost 30 percent by March 2024 from March 2022 levels.
"Strong underlying demand has boosted volumes. At the same time, the company has constantly refreshed its product slate with a wide offering across price points and sustained cost rationalization initiatives. These factors amid relatively softer input prices will increase its EBITA margin to 8-9 percent over the next two fiscal years from around 4 percent in the fiscal year ending March 2023 (fiscal 2023)," Moody's said.
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