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Moody's raises rating of Tata Motors

Rating agency Moody's today raised the country's largest automaker Tata Motors' rating by a notch on account of improved performance of its British marquee brand Jaguar Land Rover (JLR).

autos Updated: Oct 26, 2010 20:21 IST

Rating agency Moody's on Tuesday raised the country's largest automaker Tata Motors' rating by a notch on account of improved performance of its British marquee brand Jaguar Land Rover (JLR).

Moody's has assigned a Ba3 rating to Tata Motors, up from the earlier B2, it said.

JLR's performance bottomed out around the third quarter of the 2009 fiscal and has been recovering since then, driven by growing volume and higher revenues and margins on mew product launches, among other factors, Moody's Investor Service said in a statement.

"The rating upgrade reflects the recovery in the operating performance of the JLR business exceeding our expectations and the company's fast growing Indian business remaining solidly profitable, which have resulted in a much improved leverage ratio of TML," Moody's Vice-President/Senior Credit Officer Alan Greene said.

Besides, Moody's said, Tata Motors is also witnessing a solid recovery in its Indian business, backed by the growth in the country's auto sector.

While the commercial vehicle business continues to boom and represents the mainstay of its India operation, Tata Motors (TML's) passenger vehicle volume growth driven by recent product launches such as ultra-low cost Nano and Indigo Manza is supporting strong revenue growth, it said.

Further, Moody's also upped its outlook for TML from positive to stable.

"The stable outlook reflects the business's more solid footing, following the market acceptance of new products and with the strategy of the company's business divisions being steadily implemented," it said.

However, the agency noted, the company will continue facing medium-term challenges, for reasons such as a possible meltdown in demand for automobile in the US and Europe.

In 2008, Tata Motors acquired marquee brands Jaguar and Land Rover from Ford Motor Co for USD 2.3 billion.