Moody's Investors Service on September 18 had upgraded ratings of half a dozen Tata Group firms on account of Tata Sons' track record in providing timely support to these firms.
Philipp Lotter, managing director-corporate finance from Moody's says rating upgrades of Tata Group companies were mainly on account of value creation done by Tata Group companies. He expects the group companies to continue benefiting from Tata brand.
Moody's Investors Service on September 18 had upgraded ratings of half a dozen Tata Group firms on account of Tata Sons' track record in providing timely support to these firms.
Although the house does not have any rating for Tata Teleservices , he believes the company will surely benefit just by being part of the Tata brand name.
With regards to Tata Power , Lotter beleives the company has a strong standalone business and is coming out of its worst times.
Moreover, the house is also keenly watching the improvement in performance of Tata Motors ' India business. Moody's has equalised the ratings for Tata Motors and Jaguar Land Rover (JLR) and believe that JLR's strong performance would lead to further upgrade in ratings for Tata Motors.
Below is the transcript of Philipp Lotter's interview with Reema Tendulkar and Latha Venkatesh on CNBC-TV18.
Latha: What has triggered this upgrade of the Tata Group companies? You have upgraded, Tata Chemicals, Tata Steel, Tata Motors, Tata Consultancy Services (TCS)? So what is going right for all of them as a group?
A: We have upgraded all the Tata companies that we rate by one notch. It needs to be seen from the perspective of the value and the increased value that we are putting in the Tata brand and the track record that has been built through many years by Tata Sons in standing by its companies.
A lot of these companies Tata Steel, Tata Motors to some degree have been going through difficult times throughout the low growth period in India and as a result of some foreign acquisitions. What we have seen now is they are coming out of these difficult times and Tata has always stood by these entities and therefore, it was time to reflect that in our credit ratings.
Reema: Let me talk about one Tata Group stock which you have not upgraded and that is Tata Teleservices. It is a company which has very high debt, operationally the company is not doing well, in fact one of its partner entity Docomo also wants to get out of the alliance that they have, do you think Tata Teleservices will be the Achilles Heel for the entire Tata group companies?
A: We do not rate Tata Teleservices so that is why we didn't have any rating action on it but you make a very good point because Tata Teleservices is a very good example of a company within the Tata Group that carries the Tata brand. We ultimately believe that this association with the brand name, with Tata Sons will result in Tata Teleservices being looked after in one way or another.
Although we do not rate this particular entity, we do think that as being part of the group will ultimately benefit all those companies that are associated with the Tata name.
More to come
TataTeleservice stock price
On September 19, 2014, at 14:10 hrs Tata Teleservices (Maharashtra) was quoting at Rs 11.87, up Rs 0.49, or 4.31 percent. The 52-week high of the share was Rs 14.05 and the 52-week low was Rs 6.08.
The latest book value of the company is Rs -12.04 per share. At current value, the price-to-book value of the company was -0.99.
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