Moody’s cuts Tata Motors outlook to negative — here’s why

Moody’s Ratings on Monday revised Tata Motors’ outlook to negative from positive after a cyber attack forced a production halt at its UK-based subsidiary Jaguar Land Rover (JLR). The agency, however, affirmed the auto major’s Ba1 corporate family rating (CFR).

Sweta Patodia, Assistant Vice President and Analyst at Moody’s Ratings, said the change reflects the expectation that a full recovery in Tata Motors’ credit metrics could take several months. She added that the JLR cyber incident highlights customer relations risk under the ESG framework and was the key driver behind the action.

JLR cyber attack triggers production halt

Jaguar Land Rover’s plants have remained shut for the last four weeks following the cyber breach, and production is expected to stay halted until at least October 1. Even after resumption, Moody’s warned it may take months for operations to normalise.

The rating agency now estimates Tata Motors’ consolidated EBITDA for FY25-26 will fall to around USD 850 million, sharply lower than its earlier forecast of about USD 3 billion. Higher working capital needs will also lead to negative cash flow from operations this fiscal year, it said.

Rising cash burn despite strong order book

Despite the stoppage, JLR continues to bear weekly outflows of nearly GBP 500 million (USD 675 million) for supplier payments and wages. Moody’s noted this cash burn is likely to ease in coming weeks as vendor payments taper off.

Sales from existing inventory—estimated at about 25,000 vehicles—should also provide short-term relief to working capital pressures. However, Moody’s cautioned that a prolonged disruption or delay in recovery could significantly worsen the hit to earnings and liquidity.

JLR’s growing importance in Tata Motors’ profile

With the demerger of Tata Motors’ commercial vehicle business taking effect on October 1, 2025, JLR will contribute over 90 per cent of consolidated EBITDA. This convergence further ties Tata Motors’ credit profile to the performance of its luxury car arm.

Moody’s added that Tata Motors’ Ba1 rating reflects its strong global presence through JLR, a rising share in India’s passenger vehicle market, and steady debt reduction. The rating also factors in the likelihood of extraordinary support from Tata Sons, providing a one-notch uplift.

Outlook remains negative

Given the near-term challenges, Moody’s said an upgrade is unlikely over the next 12–18 months. The outlook could be revised to stable if JLR’s prospects stabilise and production normalises faster than expected.

Meanwhile, Jaguar Land Rover in a statement on Monday confirmed that it plans to partially resume manufacturing in the coming days.