Fitch Affirms Tata Motors at 'BB' with stable outlook

Rating agency Fitch today affirmed Tata Motors' long-term foreign currency issuer default rating at a speculative grade 'BB' with a stable outlook.
Stating that the company's strong financial profile is a key rating driver, Fitch said the robust performance of Tata Motors Ltd's (TML) subsidiary, Jaguar Land Rover, and its good financial flexibility have contributed to the profile.
"The agency expects the capex to be funded largely from TML's operational cash flows supported by the continuing sound operations of JLR and improvement in its Indian business," the rating agency said in a statement.
Furthermore, the company announced its (Rs 7,500 crore) rights issue plan, which if successful will further strengthen the financial profile, it added.

Expecting TML's Indian operations to improve, Fitch said it expected new product launches, both in passenger car and commercial vehicles, to drive volume growth in its Indian operations.
"In addition, lower fuel prices, improving consumer sentiment and a likely reduction in borrowing costs are likely to support improvement in demand growth in passenger cars from FY16. We also expect medium and heavy commercial vehicles volumes to grow in FY16 - supported mainly by replacement demand," it added.
Fitch further said Tata Motors' foreign currency issuer default rating continues to benefit from a one notch uplift on account of the potential support from the Tata group as the firm continues to benefit from its strategic importance to the group.

"Any weakening of linkages between the group and TML, and/or the group's inability to provide support is likely to affect the ratings negatively," it said.