Moody’s Traders Service on Thursday mentioned it has downgraded Tata Motors score as the corporate faces robust market situations amid the coronavirus pandemic. The score company mentioned it has downgraded Tata Motors’ company household score (CFR) and senior unsecured devices score to B1 from Ba3.
“The outlook on all rankings has been modified to unfavourable from rankings underneath assessment,” Moody’s Traders Service mentioned in an announcement. This score motion concludes the assessment for downgrade initiated on March 26 2020, it added.
“The downgrade displays the sustained deterioration in auto maker’s credit score profile,” Moody’s Vice President and Senior Credit score Officer Kaustubh Chaubal mentioned. The corporate’s credit score profile was already underneath strain attributable to decrease auto gross sales and falling demand in key markets even previous to the coronavirus outbreak, he added.
“The pandemic has amplified the strain on Tata Motors’ money flows and can doubtless lead to a protracted interval of weak credit score metric,” Chaubal famous. The score downgrade displays the acute challenges being confronted by the corporate with the general auto sector witnessing slowing gross sales stemming from sluggish financial exercise, weak liquidity, tight financing norms, and poor shopper sentiment, the score company mentioned.
Though the corporate instructions a 43 per cent market share within the home industrial automobile section, Moody’s mentioned it expects round 25 per cent decline in its wholesale unit gross sales in fiscal 2021 on the again of a 34 per cent decline in fiscal 2020. “Such weak demand prospects put further strain on its credit score profile as this section has subsidised the loss-making passenger automobile operations for a number of years,” it famous.
The corporate’s home passenger automobile enterprise continues to lose market share and reported losses in fiscal 2020, the company mentioned. Moody’s expects the corporate to curb the unit gross sales decline to round 10 per cent in fiscal 2021 from 37 per cent the prior yr, reflecting the corporate’s new mannequin launches compliant with the transition to Bharat VI emission norms from 1 April 2020, it added.
That mentioned, the corporate’s capability to rapidly flip round this enterprise stays challenged, particularly because the section is crowded with home and huge multinational automakers, it mentioned. Commenting on Tata Motors’ British arm Jaguar Land Rover, Moody’s mentioned it believes that a diploma of market restoration, ongoing mannequin launches, together with refreshes and the corporate’s prolonged restructuring program, will result in an enchancment in efficiency by fiscal 2022.
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