Tata Motors Ratings Upgraded Two Notches By Moody's, Outlook Positive

Moody’s Ratings has upgraded by two notches the credit ratings of Tata Motors Ltd., underscoring the deleveraging overdrive the automaker has been on over the past couple of years.

The maker of the Nexon SUV now enjoys a corporate family rating of 'Ba1' from 'Ba3' earlier, with a positive outlook on all ratings. The ratings on senior unsecured instruments also stand revised to 'Ba1' from 'Ba3' earlier.

“Tata Motors’ two-notch ratings upgrade with a positive outlook follows the company’s track record in achieving revenue growth, improving profitability and reducing debt using its free cash flow, despite elevated capital expenditure,” Kaustubh Chaubal, senior vice president at the US-based ratings agency, said in a statement on Wednesday.

The company’s leverage, measured by Moody's adjusted consolidated debt/Ebitda, fell to 1.8 times as of March 2024 from 3.9 times a year earlier and will remain at 1.3 times–1.5 times over the next two fiscals, he said.

“Today's ratings action considers the impact of Tata Motors’ sound governance practices—in particular its creditor-friendly financial policies, track record and management prudence—on its credit profile, which we view as credit-positive.”

On Wednesday, Tata Motors shares rose 1.14% to Rs 1,025 apiece on the BSE, even as the benchmark Sensex ended the day 1.11% higher at 79,468.01 points.