Moody's Downgrades Tata Motors' Outlook Following Cyber-Attack on JLR
| 2025-09-30
Moody's Downgrades Tata Motors' Outlook Following Cyber-Attack on JLR
Tata Motors faces a negative outlook from Moody's after a cyber-attack halts production at Jaguar Land Rover, affecting financial forecasts.
Tata Motors Limited, the Mumbai-based automobile manufacturer, has received a negative outlook rating from Moody's Investors Service. This decision comes in response to a recent cyber-attack targeting its British subsidiary, Jaguar Land Rover (JLR), which has resulted in a complete suspension of production.
Moody's has maintained Tata Motors' Ba1 corporate family rating (CFR) but downgraded the outlook from positive to negative. According to Sweta Patodia, an Assistant Vice President and Analyst at Moody's, this change signals expectations that any recovery in the company's credit metrics will take considerable time, likely several months.
Impact of the Cyber-Attack
The cyber incident has elicited concerns regarding customer relations under environmental, social, and governance (ESG) criteria, which Moody's identified as a crucial factor in its decision. The rating agency noted that, following the demerger of Tata Motors' commercial vehicle business scheduled for October 1, JLR will contribute over 90 per cent of Tata Motors' consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA). This close link highlights the financial vulnerability of both companies in light of the cyber-attack.
Moody's estimates that the halt in JLR's operations will greatly diminish Tata Motors' consolidated EBITDA, projecting a fall to approximately $850 million for the fiscal year ending March 2026. This contrasts sharply with earlier forecasts of around $3 billion. Additionally, the agency anticipates increased working capital requirements may lead to negative cash flow from operations this year.
Despite the production freeze, JLR is still facing significant cash outflows, estimated at around GBP 500 million (approximately $675 million) weekly, which are necessary to cover supplier payments and employee salaries. However, Moody's expects this cash burn to decrease gradually as payments to suppliers are reduced in the coming weeks.
Potential for Recovery
The agency suggests that JLR's inventory of approximately 25,000 vehicles could alleviate some short-term working capital pressures. However, Moody's has issued a cautionary note. If the production stoppage persists for an extended period or if the timeline for resuming normal operations is prolonged, the negative impacts on earnings and cash flow could intensify.
Given the current negative outlook, an upgrade in the rating is deemed unlikely in the next 12 to 18 months. Nevertheless, Moody's has indicated that a stable outlook could be established should JLR’s situation improve.
In light of these developments, JLR has announced plans to partially resume manufacturing operations in the near future, aiming to mitigate some of the adverse effects caused by the cyber-attack.
As the situation evolves, Tata Motors is expected to navigate a challenging period, seeking to recover from the financial repercussions of this incident. Investors and stakeholders are advised to monitor updates closely, given the direct implications for the company's long-term performances.
As the situation evolves, Tata Motors is expected to navigate a challenging period, seeking to recover from the financial repercussions of this incident. Investors and stakeholders are advised to monitor updates closely, given the direct implications for the company's long-term performances.
Moody's has maintained Tata Motors' Ba1 corporate family rating (CFR) but downgraded the outlook from positive to negative. According to Sweta Patodia, an Assistant Vice President and Analyst at Moody's, this change signals expectations that any recovery in the company's credit metrics will take considerable time, likely several months.
Impact of the Cyber-Attack
The cyber incident has elicited concerns regarding customer relations under environmental, social, and governance (ESG) criteria, which Moody's identified as a crucial factor in its decision. The rating agency noted that, following the demerger of Tata Motors' commercial vehicle business scheduled for October 1, JLR will contribute over 90 per cent of Tata Motors' consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA). This close link highlights the financial vulnerability of both companies in light of the cyber-attack.
Moody's estimates that the halt in JLR's operations will greatly diminish Tata Motors' consolidated EBITDA, projecting a fall to approximately $850 million for the fiscal year ending March 2026. This contrasts sharply with earlier forecasts of around $3 billion. Additionally, the agency anticipates increased working capital requirements may lead to negative cash flow from operations this year.
Despite the production freeze, JLR is still facing significant cash outflows, estimated at around GBP 500 million (approximately $675 million) weekly, which are necessary to cover supplier payments and employee salaries. However, Moody's expects this cash burn to decrease gradually as payments to suppliers are reduced in the coming weeks.
Potential for Recovery
The agency suggests that JLR's inventory of approximately 25,000 vehicles could alleviate some short-term working capital pressures. However, Moody's has issued a cautionary note. If the production stoppage persists for an extended period or if the timeline for resuming normal operations is prolonged, the negative impacts on earnings and cash flow could intensify.
Given the current negative outlook, an upgrade in the rating is deemed unlikely in the next 12 to 18 months. Nevertheless, Moody's has indicated that a stable outlook could be established should JLR’s situation improve.
In light of these developments, JLR has announced plans to partially resume manufacturing operations in the near future, aiming to mitigate some of the adverse effects caused by the cyber-attack.
As the situation evolves, Tata Motors is expected to navigate a challenging period, seeking to recover from the financial repercussions of this incident. Investors and stakeholders are advised to monitor updates closely, given the direct implications for the company's long-term performances.
As the situation evolves, Tata Motors is expected to navigate a challenging period, seeking to recover from the financial repercussions of this incident. Investors and stakeholders are advised to monitor updates closely, given the direct implications for the company's long-term performances.
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