Tata Steel shares gain 2% on Moody’s rating upgrade

Shares of Tata Steel Limited gained over 2 percent higher to Rs 130 in early trade on September 26 after Moody’s Investors Service revised the company’s outlook to ‘stable’ and upgraded its long-term rating on the hope of an improvement in profits and its debt reduction efforts.

The steelmaker’s long-term rating was upgraded to ‘Baa3’ from ‘Ba1’, the rating agency said in a statement on September 25. “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.”

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“We expect the company’s profitability to increase even as softer steel prices dent revenues,” Kaustubh Chaubal, Moody’s Senior Vice-President, said in a press release.

Moody’s also said that its rating reflects the company’s large-scale globally cost-competitive, vertically integrated steel operations in India.

The credit rating agency also noted that the new rating is attributed to the consistent growth of Tata Steel’s European operations, along with the closure of unprofitable upstream operations in the UK. Additionally, it is influenced by the company’s strong association with its parent organization, Tata Sons.

In June, Moody’s had previously revised Tata Steel’s outlook from ‘stable’ to ‘positive’ while simultaneously reaffirming its Ba1 corporate family rating (CFR).

In its rating rationale, Moody’s emphasised that Tata Steel’s robust presence in India, the world’s second-largest steel market, will play a pivotal role in shaping the company’s credit profile.

Moody’s noted in its statement that the rating outlook underscores Tata Steel’s ability to maintain resilient operations amid a challenging industry environment.

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