Moody’s Investors Service today said it will be business as usual for listed Tata companies despite the boardroom brawl but cautioned that any change in the group’s strategy and Tata Sons’ support policy for operating companies could exert pressure on their ratings. The ratings of four Tata Group operating companies continue to benefit from an uplift from the group’s main holding company, Tata Sons, despite the group’s ongoing board reshuffle, it said.
“We expect that Tata Sons can continue to extend support to its key operating companies, should the need arise, owing to its substantial cash holdings and the significant value of its listed equity investments, and despite an ongoing boardroom reshuffle,” says Kaustubh Chaubal, Moody’s Vice President and Senior Analyst.
Consequently, the ratings of the group’s four operating companies – Tata Motors, Tata Chemicals, Tata Steel and Tata Power – will continue to include a one notch uplift, based on Moody’s assessment of support for the companies from Tata Sons, in times of need.
As for Tata Consultancy Services, Tata Group’s flagship subsidiary, the company’s rating reflects its intrinsic credit strength.
“In Moody’s view, it is business as usual at the rated Tata companies, which are listed entities, in spite of the leadership change,” it said. Moody’s said it does not expect any change in the operating and long-term strategy of the Tata companies.
“Nonetheless, any change in group strategy or in the strategy of the operating companies — which in our view increases their risk appetite — could exert pressure on the Tata companies’ ratings,” adds Chaubal.
Also a change in Tata Sons’ support policy for its group companies could also affect the Tata Group operating companies’ ratings.