Tata Motors’ outlook cut to ‘negative’ by Moody’s after cyber-attack halts JLR production

NEW DELHI — Moody’s Ratings on Monday downgraded Tata Motors’ outlook to negative from positive after a cyber-attack at its British arm Jaguar Land Rover (JLR) forced a complete production halt.

The rating agency, however, affirmed Tata Motors’ Ba1 corporate family rating (CFR).

“The outlook change to negative from positive reflects our view that a full recovery in credit metrics will likely take several months,” said Sweta Patodia, Assistant Vice President and Analyst at Moody’s Ratings.

The cyber incident at JLR has highlighted customer relations risk under social considerations in the ESG framework, which Moody’s said was the main reason for its rating action.

Also read: Tata Motors demerger to take effect on October 1

After the demerger of Tata Motors’ commercial vehicle business on October 1, JLR will account for more than 90 per cent of its consolidated earnings before interest, tax, depreciation and amortisation (EBITDA), showing the strong link between the two companies’ credit profiles.

Moody’s estimates that JLR’s production halt will reduce Tata Motors’ consolidated EBITDA to around $850 million for the fiscal year ending March 2026, down sharply from its earlier projection of about $3 billion.

The agency also expects higher working capital requirements to push the company into negative cash flow from operations this year.

Despite production being halted, JLR is still incurring weekly cash outflows of nearly GBP 500 million ($675 million), covering supplier payments and employee wages.

Moody’s said this cash burn is likely to slow in the coming weeks as supplier payments reduce.

The agency added that JLR’s sales from its existing inventory of around 25,000 vehicles should help ease some of the near-term working capital pressure.

However, it warned that if the production suspension lasts longer or the return to normal operations is delayed, the impact on earnings and cash flows could worsen.

With the negative outlook, Moody’s said an upgrade is unlikely over the next 12–18 months. The outlook could be revised to stable if JLR’s own outlook improves.

Meanwhile, JLR in a statement said it will partially resume manufacturing operations in the coming days.