NEW DELHI: Moody’s Investors Service on Tuesday allotted Ba3 rating to the proposed senior unsecured notes to be issued by Tata Motors Ltd (TML) with a negative outlook. Tata Motors on Tuesday informed that its global wholesales in October 2019, including Jaguar Land Rover, were at 89,108 units lower by 19 per cent compared to October 2019.
“The Ba3 ratings reflect TML’s leading market position in commercial vehicles (CVs) in India; 100 per cent ownership of the premium/luxury car manufacturer Jaguar Land Rover Automotive Plc (JLR, B1 negative); and ownership by Tata Sons, which results in a one-notch uplift, reflecting our expectation of continued parental support, when needed,” said Kaustubh Chaubal, VP, senior credit officer, Moody’s.
Moody’s said Tata Sons proposed infusion of $914 million equity in Tata Motors is credit positive for the company. On October 25, TML announced that it will make a preferential allotment of equity shares and convertible warrants to Tata Sons for a $914 million equity injection. Post the infusion Tata Sons’ shareholding in TML will increase to 46.4 per cent from the current 38.4 per cent.
Moody’s added that TML’s operations face acute challenges in sluggish economic growth, weak liquidity, and tight financing norms. TML’s PV sales volumes declined by 41 per cent in the first half of FY2020 while CV volumes declined by 29.5 per cent over the same period. Moody’s expects TML to deliver slightly better volumes in H2 fiscal 2020 as festive demand picks up. Last week, Moody’s changed its outlook on India’s sovereign ratings to negative from stable.