Tata Steel share price rises 2% as Moody's upgrades Tata Steel's corporate family rating to Baa3, outlook stable
₹129.70 against the previous close of ₹127.35 and soon rose over 2 per cent to the level of ₹130.05 on BSE. Moody's Investors Service, a global rating agency, on Monday (September 25) upgraded the corporate family rating of Tata Steel from ‘Ba1’ to ‘Baa3’ and changed the outlook to ‘stable’ from ‘positive’.
"The upgrade reflects our expectation of the continued strength in Tata Steel's credit profile due to the company's solid market position in India. We expect the company's profitability to increase even as softer steel prices dent revenues," said Kaustubh Chaubal, a senior vice president at Moody's.
"The upgrade also reflects the company's considerable deleveraging through gross debt reduction and our expectation that Tata Steel will maintain conservative financial policies with a well-balanced capital allocation and financial metrics appropriate for its Baa3 rating," Chaubal added. The rating agency highlighted that Tata Steel's Baa3 issuer rating reflects the company's large-scale, globally cost-competitive, vertically integrated steel operations in India, the sustained improvement in its European operations, especially following the expected closure of the loss-making upstream operations in the United Kingdom, and the company's close association with its parent, Tata Sons Ltd.
The rating also captures the company's exposure to the inherent volatility in steel prices and spreads, and the historically volatile performance of its European operations, Moody's said. (Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) Moody's pointed out that Tata Steel's strong presence in the world's second-largest steel market, India,
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