Tata Steel Share Price Surges 2% After Moody’s Upgrades Its Ratings

Tata Steel share price rose over 2% in early morning trade on Tuesday on BSE after Moody’s Investor Services upgraded corporate family rating. The Tata Steel share price commenced the trading session at Rs 129.70, surpassing the prior day's closing value of ₹127.35. Shortly thereafter, it climbed by more than 2%, reaching ₹130.05 on the BSE.

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Global rating agency Moody’s Investor Services, on Monday, upgraded the ratings of Tata Steel from ‘Ba1’ to ‘Baa3’ and changed the outlook to ‘stable’ from ‘positive’.

"The upgrade reflects our expectation of the continued strength in Tata Steel's credit profile due to the company's solid market position in India. We expect the company's profitability to increase even as softer steel prices dent revenues," said Kaustubh Chaubal, a senior vice president at Moody's.

Chaubal further added, “The upgrade also reflects the company's considerable deleveraging through gross debt reduction and our expectation that Tata Steel will maintain conservative financial policies with a well-balanced capital allocation and financial metrics appropriate for its Baa3 rating.”

The rating agency emphasized that Tata Steel's Baa3 issuer rating is a reflection of the company's extensive, globally cost-competitive, vertically integrated steel operations in India. It also takes into account the consistent enhancement of its European operations, notably after the anticipated cessation of unprofitable upstream operations in the United Kingdom, as well as its strong affiliation with its parent company, Tata Sons Ltd.

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Moody’s further also noted that the rating takes into account the company's susceptibility to the natural fluctuations in steel prices and profit margins, as well as the historically unstable performance of its European operations.