Tata Sons IPO may alter long-term group support

S&P Global Ratings said Tuesday that a potential listing of Tata Sons and a leadership transition would have no immediate impact on ratings of group entities, because any changes in the group's financial policies are likely to be gradual. S&P considers its rated Tata companies strategically important and gives up to three notches of group support. It rates Tata Steel, Tata Motors, Tata Power, Tata Power Renewable Energy and Tata Capital at BBB with stable outlook; Tata Motors Passenger Vehicles BBB with negative outlook; and Jaguar Land Rover BBB- with negative outlook. The Tata Sons board voted September 17 to reappoint N. Chandrasekaran as chairman for a third five-year term; his current tenure was due to end February 2027. Noel Tata opposed the reappointment and challenged its validity. The RBI on August 6 kept unchanged Tata Sons' obligation to list after rejecting a request to deregister as an upper-layer NBFC. Tata Trusts owns about 66 per cent of Tata Sons. S&P said any change making a clear controlling entity less obvious or weakening the holding company's credit profile could affect group credit quality and the notch-up for individual ratings. Greater public ownership could increase scrutiny of capital allocation and support for weaker entities over time.