CRISIL has upgraded its ratings on Tata Motors's (TML's) long-term bank facilities to 'AA/Stable' from 'AA-/Positive', while reaffirming the rating on the short-term facilities and debt programme at 'A1+'. CRISIL has also reaffirmed its rating on the secured, low-coupon, premium redemption debentures, guaranteed by the State Bank of India at 'AAA (SO)/Stable'.

The upgrade primarily reflects the improvement in the business profile of Jaguar Land Rover (JLR). The upgrade also reflects CRISIL's expectation that TML will be able to maintain a comfortable financial risk profile despite high capital expenditure (capex) and ongoing downturn in the domestic commercial vehicle (CV) industry.

CRISIL believes that JLR will sustain healthy growth in its sales volumes driven by an expanded portfolio of new model launches, demonstrated ability to launch successful car models, and a well-diversified geographic footprint. CRISIL believes that JLR's business risk profile will improve, over the medium term, backed by its ability to drive growth from multiple new launches. This is in contrast to the past when a substantial portion of incremental volumes in each year came from a single new product launch. CRISIL believes that a well-rounded portfolio augurs well for JLR as it will help the company to sustain the volume growth, in case of low volumes for one of its new product launches.

CRISIL believes that TML will maintain healthy sales volumes and profitability at JLR and thereby sustain its comfortable capital structure. The outlook may be revised to 'Positive' if JLR's capex programme significantly improves its business risk profile through an increase in sales volumes; a well-diversified portfolio and increased market share. Conversely, the outlook may be revised to 'Negative' if JLR's performance weakens, resulting in significant deterioration in consolidated TML's profitability and capital structure.