ID :
139099
Wed, 08/25/2010 - 01:32
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https://oananews.org//node/139099
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Crisil upgrades Tata Motors debt rating
New Delhi, Aug 23 (PTI) Ratings agency Crisil Monday
raised its long-term debt rating of Tata Motors, reflecting an
improvement in the ability of the auto major to repay loans.
The upgrade to 'AA-' from 'A+' comes on expectations of
Jaguar LandRover, the entity Tata Motors acquired in 2008,
doing well and generating positive cash flows, Crisil said.
Instruments rated 'AA' are judged to offer a high degree
of safety with regard to timely payment of financial
obligations.
The agency retained the company's outlook at 'stable'. A
ratings outlook indicates the direction in which a rating may
move over a medium-term horizon of 1-2 years.
"The stable outlook takes into account the expected
improvement in capital structure in the current financial
year. Crisil believes that JLR will continue to maintain
healthy operating profitability over the medium term," it
said.
The upgrade comes within weeks of Tata Motors reporting a
consolidated net profit of Rs 1,988.73 crore for the quarter
ended June 30 on the back of strong sales in the domestic
market and a good show by Jaguar and Land Rover.
"Even though the current operating profitability may not
be sustainable, Crisil believes that JLR will be able to
sustain a healthy profitability compared to previous estimates
and will generate positive free operating cash-flows from
2010-11 onwards," it said.
The upgrade reflects Crisil's belief that Tata Motors'
capital structure will improve faster than earlier
anticipated, the statement said.
It said the ratings upgrade also reflects "better-than-
expected operating performance of the company and management's
stated intent to improve the capital structure through equity
and equity linked instruments over the next 12 months."
Also the positive business outlook for both commercial
and passenger vehicles in the Indian markets would give a
boost to Tata Motors' Indian operations, it said.
However, the rating agency cautioned that in the context
of rising input prices, sustaining operating profit margins
in the domestic market could be difficult.
The outlook may be revised to 'Positive' if there is
higher-than-expected growth in JLR and in Tata Motors' Indian
business. Conversely, the outlook may be revised to 'Negative'
in the event of weakening in JLR's performance, it added.
Crisil has also reaffirmed its rating on the secured,
low-coupon, premium redemption debentures, guaranteed by State
Bank of India at 'AAA/Stable'. PTI JD
KAB
raised its long-term debt rating of Tata Motors, reflecting an
improvement in the ability of the auto major to repay loans.
The upgrade to 'AA-' from 'A+' comes on expectations of
Jaguar LandRover, the entity Tata Motors acquired in 2008,
doing well and generating positive cash flows, Crisil said.
Instruments rated 'AA' are judged to offer a high degree
of safety with regard to timely payment of financial
obligations.
The agency retained the company's outlook at 'stable'. A
ratings outlook indicates the direction in which a rating may
move over a medium-term horizon of 1-2 years.
"The stable outlook takes into account the expected
improvement in capital structure in the current financial
year. Crisil believes that JLR will continue to maintain
healthy operating profitability over the medium term," it
said.
The upgrade comes within weeks of Tata Motors reporting a
consolidated net profit of Rs 1,988.73 crore for the quarter
ended June 30 on the back of strong sales in the domestic
market and a good show by Jaguar and Land Rover.
"Even though the current operating profitability may not
be sustainable, Crisil believes that JLR will be able to
sustain a healthy profitability compared to previous estimates
and will generate positive free operating cash-flows from
2010-11 onwards," it said.
The upgrade reflects Crisil's belief that Tata Motors'
capital structure will improve faster than earlier
anticipated, the statement said.
It said the ratings upgrade also reflects "better-than-
expected operating performance of the company and management's
stated intent to improve the capital structure through equity
and equity linked instruments over the next 12 months."
Also the positive business outlook for both commercial
and passenger vehicles in the Indian markets would give a
boost to Tata Motors' Indian operations, it said.
However, the rating agency cautioned that in the context
of rising input prices, sustaining operating profit margins
in the domestic market could be difficult.
The outlook may be revised to 'Positive' if there is
higher-than-expected growth in JLR and in Tata Motors' Indian
business. Conversely, the outlook may be revised to 'Negative'
in the event of weakening in JLR's performance, it added.
Crisil has also reaffirmed its rating on the secured,
low-coupon, premium redemption debentures, guaranteed by State
Bank of India at 'AAA/Stable'. PTI JD
KAB
