S&P Global Revises Ratings For Tata Group Firms, Shares Little Changed

S&P Global Ratings has raised its ratings for various Tata Group companies.

What Happened: The global ratings agency has upgraded its rating for several Tata Group firms, highlighting that the potential support these firms can get from parent company Tata Sons appears to be even greater than initially anticipated. 

Tata Motors and Tata Steel have been upgraded to BBB with a “stable” outlook, from BB+ and BBB- respectively with an outlook of “watch positive”.

Jaguar Land Rover has been upped to BBB- from BB, with the outlook changed to “positive” from “watch positive”. Tata Power has been raised to BBB- from BB+ with the outlook changed to “positive” from “watch positive”. The outlook for Tata Capital has been revised to “positive” from “stable”, whereas S&P affirmed its BBB- rating for the long term and A-3 for the short term.

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Company	Previous Rating	New Rating	Previous Outlook	New Outlook
Tata Motors	BB+	BBB	Watch Positive	Stable
Tata Steel	BBB-	BBB	Watch Positive	Stable
Jaguar Land Rover	BB	BBB-	Watch Positive	Positive
Tata Power	BB+	BBB-	Watch Positive	Positive
Tata Capital	BBB-/A-3	BBB-/A-3	Stable	Positive

The agency considers the companies strategically important to Tata Sons. The reassessment of the firms takes into account several factors, including the enhanced strategic alignment and operational connections among Tata Group companies, S&P said.

The assessment also considers factors including the reputational connection of the rated companies to the Tata brand, Tata Sons’ growing influence on the financial policies and business strategies of group companies and previous instances of exceptional support from Tata Sons during financial difficulties, such as with Tata Teleservices.

"The stronger strategic cohesiveness, we believe, increases the longer-term commitment of Tata Sons to group entities as well as its incentive to support," it said in the statement.

Additionally, TML Holdings and ABJA Investment Co, which are wholly-owned subsidiaries of Tata Motors and Tata Steel, respectively, were also upgraded to BBB with a “stable” outlook. The agency considers these entities to be core to their respective parent companies.

Price Action: Most Tata firms were trading flat on Wednesday. Tata Motors was trading 0.15% lower at ₹748.15, Tata Steel was down 0.11% ₹153.76, Tata Power was trading 0.92% higher at ₹426.20.

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