S&P raises Tata Motors' rating
13 Aug 2010
Standard & Poor's Ratings Services said today that it raised its long-term corporate credit rating on Tata Motors Ltd. to 'B+' from 'B' on a positive outlook. At the same time, it raised the issue rating on the company's senior unsecured notes to 'B+' from 'B'.
"We raised the rating on Tata Motors to reflect the sustained improvement in the operating performance of Jaguar and Land Rover (JLR) and the company's India operations over the past year," S&P said in a statement.
It said that the improvement in Tata Motors' operating performance, along with the company's debt reduction measures, has improved its cash flow protection measures and liquidity position.
Tata Motors' consolidated adjusted EBITDA margins were about 10 per cent in the quarter ended 30 June 2010, and 8 per cent for the past nine months.|
"Improved price realisations, higher sales, and favorable exchange rate movements led the improvement at JLR. In addition, Tata Motors' India operations benefited from strong domestic economic growth, new product launches, commissioning of the Sanand plant for the production of the Nano, and a dominant market position in the commercial vehicles market," said Standard & Poor's credit analyst Mehul Sukkawala.
"Nevertheless, we expect the company's margins to remain susceptible to the tentative global economic recovery and exchange rate movements at JLR, increasing pressure on cost because of higher commodity prices, and increasing competition in the Indian commercial vehicle market," Sukkawala added.
