Tata Motors’ pact with private equity firm TPG ‘credit positive’: Moody’s – EQ Mag Pro
Moody’s Investors Service on Wednesday stated that Tata Motors’ pact with personal fairness agency TPG is ‘credit score optimistic’, as it is going to assist the automaker to scale up its electrical car enterprise.
Last month, Tata Motors introduced that it’s going to elevate USD 1 billion in its passenger electrical car (EV) enterprise from TPG Rise Climate.
“We estimate that TPG Capital’s USD 1 billion capital injection into Tata Motors’s (TML, B1 stable) electric vehicle subsidiary, EVCo, will fund half its EV spending in India (Baa3 stable) through March 2026,” Moody’s Investors Service stated in an announcement.
Tata Motors intends to make use of the funds, which it is going to obtain in trade for compulsorily convertible choice shares issued to TPG, to create a portfolio of EVs and devoted battery electrical car (BEV) platforms.
EVCo may even put money into battery applied sciences and charging infrastructure in affiliation with Tata Power Ltd.
Moody’s Investors Service famous that the automaker has an early mover benefit in EVs in India, however faces challenges in scaling the enterprise.
“The company’s planned launch of 10 new EVs through March 2026, will help cement its EV position in India. However, its market share will decline from 71 per cent as EV penetration rises.
“The scaling up of the EV market will rely upon the tempo of growth and set up of charging infrastructure. High EV costs additionally weigh on demand as inner combustion engine (ICE) automobiles are comparatively cheaper,” it added.
It however, pointed out that carbon transition is a risk as long as Tata motors remains primarily concentrated in ICE vehicles.
The automaker is taking steps to electrify its products in the passenger vehicle (PV) and commercial vehicle (CV) segments in India but ICE vehicles will still dominate sales and thus carbon transition remains a risk, it stated.
Moody’s Investors Service also noted that the creation of a dedicated passenger vehicle subsidiary would allow the auto major to go ahead with strategic partnerships with global auto manufacturers.
“The firm’s transfer to switch its lately worthwhile PV operations to a wholly-owned subsidiary will give it better flexibility in coming into strategic partnerships with different automakers. These tie-ups might present TML with entry to new merchandise, applied sciences and capital,” it famous.
Tata Motors would deliver its sturdy distribution community and manufacturing capability to the partnerships, it added.
Source: PTI
