S&P raises Tata Motors long term credit ratings to 'BB' from 'BB-'

Wednesday 11 July 2012, 12:00 PM by

In a positive move for the Indian auto giant Tata Motors, the rating agency Standard & Poor's (S&P) on Monday announced to raise the long-term corporate credit rating of the company to 'BB' from 'BB-'based. With taking into consideration the company’s positive outlook, S&P has also raised the issue ratings on Tata Motors’s senior unsecured notes to 'BB' from ‘BB-’.

The popular rating agency believes that Tata Motors has witnessed an improvement in the competitive position and cash flow stability. The risk profile of the company is now termed as “fair”. As per a statement issued by the company, "Tata Motors' significant financial risk profile reflects our expectation that the company's ratio of consolidated debt to EBITDA will be about 2.0x-2.5x in 2013."

Surpassing the expectations of rating agency, the UK based subsidiary of the Tata Motors – Jaguar & Land Rover (JLR) performed considerably well in the last fiscal. JLR accounted for about 60% of Tata Motors' consolidated revenues and over 66 percent of their EBITDA in the financial year ended on 31st March 2012.

As per a statement given by Mr. Abhishek Dangra, Standard & Poor's credit analyst, "Tata Motors' dominant position in the growing Indian commercial vehicle market and JLR's improving competitive position support the company's business risk profile."