While the rating agency affirmed Tata Motors’ corporate family rating (CFR) at Ba1, it cited material deterioration in JLR’s credit metrics and production disruptions stemming from the cyberattack as primary reasons behind the outlook revision.
Moody’s Assistant Vice President and Analyst Sweta Patodia said, “The outlook change to negative from positive reflects our view that a full recovery in credit metrics will likely take several months.”
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She also emphasised that the cyber incident has exposed customer relations risks, falling under social risk metrics within the ESG framework.
According to Moody’s, JLR’s operations have been disrupted for four weeks, and the complete production halt is expected to last until at least October 1. Although the company plans to resume manufacturing operations gradually, full normalisation may take several additional months.The rating agency also estimates a significant financial impact, projecting that Tata Motors’ consolidated EBITDA for FY26 will fall to around USD 850 million—substantially lower than the earlier forecast of USD 3 billion. Furthermore, increased working capital needs are anticipated to drive negative cash flows for the ongoing fiscal year.Moody’s highlighted that, despite the halt, JLR continues to incur weekly cash outflows of GBP 500 million (USD 675 million) due to supplier payments and employee wages.
However, the agency noted that this cash burn may reduce in the coming weeks as supplier payments stabilise. Additionally, the sale of existing inventory, estimated at 25,000 vehicles, is expected to help alleviate near-term working capital pressures.
The agency warned that prolonged production suspension or a delayed return to normal operations could intensify the negative impact on earnings and cash flows. It added that an upgrade is unlikely over the next 12 to 18 months unless there is a sustained recovery, in which case the outlook could be revised to stable.
In a company clarification dated September 29, Jaguar Land Rover confirmed that a controlled, phased restart of operations is underway.
A spokesperson stated, “We are taking further steps towards our recovery and the return to manufacture of our world-class vehicles.” JLR also mentioned that some manufacturing operations will resume in the coming days, with ongoing support from cybersecurity specialists, the UK’s National Cyber Security Centre (NCSC), and law enforcement agencies.
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Despite the downgrade, Moody’s acknowledged Tata Motors’ continued strong presence in the global luxury car market through JLR, its expanding market share in the Indian passenger vehicle segment, and improved credit metrics backed by debt reduction and earnings growth.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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