This is why Moody’s upgrades Tata Power’s ratings, know what will be the benefit
Rating Upgrade : Rating agency Moody’s has given Tata Power a Ba2 rating and has kept the company’s outlook stable. The agency feels that the company is poised to generate revenue from the growing renewable agency business in the coming months. Tata Power’s Ba2 rating involves a step up move as Moody’s estimates suggest the company is also likely to get support from its major shareholder Tata Sons, if needed.
Other factors affecting Tata Power’s rating include cash flows from its regulated business, thermal coal prices for the company’s Mundra project and increased financial leverage with Indonesian coal mines.
Company’s profit increased
Tata Power’s consolidated net profit for the September quarter 2021-22 also increased by 50% to Rs 421 crore with increased earnings as compared to Rs 279 crore in the same period last year. According to Moody’s Vice President and Senior Credit Officer Abhishek Tyagi, this rating will also be helped by Tata Sons Ltd’s 45.2% ownership in Tata Power and its track record of backing the company.
Tata Sons will also get help
Stable Outlook is given by Moody’s on the premise that the rating agency expects the underlying business and financial profile of Tata Power to be stable and that Tata Sons will also assist Tata Power, if required. Moody’s said the BA2 rating has limited risk in view of the shareholding of Tata Sons.
They have also clearly stated that this risk is partially handled by an experienced management team, assisted by experienced board members in the areas of corporate governance, business strategy and operational and financial capabilities.
future strategy
Tata Power’s revenue from operations grew 18 per cent to Rs 9,810 crore during the second quarter as against Rs 8,289 crore in the same quarter last year. Tata Power aims to take the renewables business towards its 2030 target. According to reports, the company’s management believes that Tata Power & Portfolio currently holds 32 per cent stake in Clean Energy, which is expected to grow to 80 per cent by 2030.
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