S&P Global Ratings has upgraded the ratings of several Tata Group companies citing expectations of “extraordinary support” from Tata Sons, the holding company.
It raised its rating of Tata Motors by two notches, and that of Tata Steel and Tata Power by one notch each. Unlisted subsidiaries Jaguar Land Rover, TML Holdings, and ABJA Investment also benefited from S&P’s reassessment. The rating firm also changed its outlook on Tata Capital to positive from stable, setting expectations of a rating upgrade.
S&P analysts attributed the improved ratings to greater strategic cohesion and operational links among Tata Group companies.
S&P had initiated a reassessment of the relationship between Tata Sons and its subsidiaries in June. The rating agency sought to review the impact of higher operational integration between Tata Sons and group companies.
“We now consider the above rated entities as strategically important to Tata Sons. The reassessment of group support reflects various factors, including the increased strategic cohesiveness and operational linkages within Tata group companies. The stronger strategic cohesiveness, we believe, increases the longer-term commitment of Tata Sons to group entities as well as its incentive to support,” S&P said late on Tuesday evening.
Earlier this month, Ratings agency Moody’s upgraded Tata Motors’s (TML) corporate family rating (CFR) by two notches to Ba1 from Ba3 with the outlook remaining positive, due to the automaker’s revenue growth, improving profitability and debt reduction.