Moody’s affirms Tata Motors’ Ba1 rating but shifts outlook to negative due to JLR’s cyberattack-induced production halt and expected sharp decline in earnings.
30 Sep 2025 | 3189 Views | By Shristi Ohri
Moody's Ratings has maintained Tata Motors Limited's Ba1 corporate family rating while revising its outlook from positive to negative, citing significant operational disruptions at its luxury vehicle subsidiary Jaguar Land Rover following a cyberattack.
The rating agency confirmed that a cyber incident at Jaguar Land Rover Automotive Plc (JLR) ...
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Moody's Ratings has maintained Tata Motors Limited's Ba1 corporate family rating while revising its outlook from positive to negative, citing significant operational disruptions at its luxury vehicle subsidiary Jaguar Land Rover following a cyberattack.
The rating agency confirmed that a cyber incident at Jaguar Land Rover Automotive Plc (JLR) has severely disrupted operations for the past four weeks, resulting in a complete production shutdown expected to last at least until October 1. The incident has prompted Moody's to substantially revise its financial forecasts for Tata Motors.
"The affirmation of TML's Ba1 rating reflects our view that it will likely be able to withstand the impact of the cyber incident," said Sweta Patodia, Assistant Vice President and Analyst at Moody's Ratings. However, she noted that "a full recovery in credit metrics will likely take several months."
Moody's now estimates that Tata Motors' consolidated EBITDA for the fiscal year ending March 31, 2026, will fall to approximately $850 million, down dramatically from previous forecasts of around $3 billion. The rating agency also anticipates negative cash flow from operations for the current fiscal year due to elevated working capital requirements.
Despite the production halt, JLR continues to face weekly cash outflows of approximately £500 million ($675 million) to meet ongoing obligations including supplier payments and employee wages. The rating agency expects this cash burn to moderate as supplier payments decrease in the coming weeks. The company has an estimated inventory of around 25,000 vehicles, and the resumption of sales from this existing stock is expected to help alleviate working capital pressures in the near term.
The sharp decline in earnings is projected to drive Tata Motors' consolidated debt-to-EBITDA ratio to approximately 10.0x by March 2026, a significant increase from 2.2x recorded in March 2025. However, Moody's anticipates leverage will normalize toward 2.0x by March 2027 as JLR's operations gradually return to normal over the coming months.
The rating action comes as Tata Motors prepares to demerge its commercial vehicle business, which becomes effective October 1, 2025. Following this separation, JLR will contribute more than 90% of the company's consolidated EBITDA, further highlighting the convergence of their credit profiles.
Moody's decision follows a recent rating action on JLR itself, emphasizing the interconnected nature of the two entities' financial health.
Despite the challenges, Moody's considers Tata Motors' liquidity position adequate. As of June 2025, the company held consolidated cash and cash equivalents of approximately $5.7 billion, though a portion of cash from Indian operations will be transferred to the commercial vehicle entity upon demerger.
JLR maintains additional liquidity support through an undrawn revolving credit facility of £1.7 billion maturing between 2028 and 2029, a £1 billion UK Export Finance-backed loan facility available until August 2027, and recently secured short-term working capital facilities totaling £2 billion to address temporary cash flow shortfalls. In India, Tata Motors benefits from access to 364-day working capital lines and robust banking relationships, supported by its association with the Tata Group.
The cyber incident has led Moody's to revise Tata Motors' sub-factor score for customer relations to 4 from 3, reflecting information security and data privacy concerns. The rating agency identified this as a customer relations risk under social considerations within its ESG framework, making it a key driver of the rating action.
Given the negative outlook, Moody's indicated that an upgrade is unlikely over the next 12 to 18 months. The outlook could return to stable if JLR's outlook is similarly revised.
A downgrade of JLR's ratings would automatically result in a downgrade of Tata Motors' corporate family rating. Additionally, sustained consolidated debt-to-EBITDA above 3.5x, persistently negative free cash flows, or weakening liquidity would also create downward rating pressure.
Tata Motors Limited is the flagship automotive company of the Tata Group and India's leading commercial vehicle manufacturer. In the twelve months ending June 2025, the company sold approximately 379,000 commercial vehicles and 542,400 passenger vehicles, excluding JLR sales.
JLR, Tata Motors' wholly owned UK-based subsidiary, manufactures luxury vehicles under the Range Rover, Defender, and Discovery brands. The subsidiary sold 390,400 units globally during the same period.