Fitch Affirms Tata Motors Rating With Stable Outlook

New Delhi: Rating agency Fitch on Tuesday affirmed Tata Motors’ long-term foreign currency issuer default rating at a speculative grade of ‘BB’ with a stable outlook.

The company’s small size in relation to global auto majors and its profitable wholly-owned subsidiary Jaguar Land Rover is a key rating driver. Fitch said the company’s robust passenger vehicle line-up and strong commercial vehicle sales contributed to the profile.

“The affirmation is due to the sustained stable financial performance of JLR and Tata Motor’s automobile business and market leadership in the Indian commercial vehicle market,” the rating agency said in a statement.

The Mumbai-based auto major would be launching three new cars in 2016 – the Kite 5 compact sedan, the Nexon utility vehicle and the Hexa sports utility vehicle, it said.

It has already launched the Tiago hatchback this year.

“These product launches, along with the continued growth in commercial-vehicle sales in India, will drive volume and revenue growth as well as better realisations per vehicle. Tata Motor’s commercial-vehicle sales in India will increase due to robust economic growth and replacement demand,” Fitch said.

It further said Tata Motors’ foreign currency issuer default rating continues to benefit from a one notch uplift on account of the potential support from the Tata group as the firm continues to benefit from its strategic importance to the group.

“Fitch believes support from the Tata group would be forthcoming when necessary, because Tata Motors is of strategic importance to the group,” it said.

Any weakening of linkages between the group and Tata Motors, or the group’s inability to provide support, is likely to affect the ratings negatively, it added.

Shares in Tata Motors, on Tuesday, ended 1.68 per cent higher at Rs 300.15 apiece on the BSE, whose benchmark Sensex index finished down 0.81 per cent.


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