CRISIL assigns stable outlook to Tata Sons' Rs 630-cr NCD issue

CRISIL Ratings has assigned a stable outlook to Tata Sons’ Rs 630-crore non-convertible debenture (NCD) issue. It also maintained the ‘outstanding’ rating on the company’s debt programmes and bank facilities at 'CRISIL AAA/FAAA/Stable/CRISIL A1+’.

The stable outlook for the NCDs reflected Tata Sons’ financial flexibility as the principal holding company of the Tata group, the agency said in a release on Thursday. The financial flexibility would mitigate the impact of the relatively aggressive capital structure resulting from its participation in the Tata group’s acquisition and expansion programmes, it added.

“CRISIL believes Tata Sons’ business risk profile will be increasingly dependent on the success of its investments, which carry risks associated with implementation and integration,” it said. Tata Sons’ financial flexibility also arose from its ability to raise additional funds by sale or pledge of investments, primarily equity shares in Tata Consultancy Services (TCS), it added.

As of December 11, Tata Sons’ 73.75 per cent stake in TCS had a market value of about Rs 2,97,000 crore. Tata Sons also has strong liquidity, as reflected in its cash and bank balance of about Rs 7,440 crore as on March 31, 2013.

The rating agency may revise its outlook to ‘negative’ if Tata Sons’ financial flexibility is adversely affected, especially in case of larger-than-expected investments.