(Reuters) -Ratings agency S&P Global on Thursday downgraded its outlook of India’s Tata Motors Passenger Vehicles to ‘negative’, citing a “slow recovery” of the automaker’s key Jaguar Land Rover (JLR) unit, which was hit by a cyberattack early last month.
The cyber incident at UK-based JLR, the cash cow unit of Tata Motors, led to an over three-week pause in production and hurt its sales. The carmaker resumed phased manufacturing late in September.
After the split of Tata Motors into separate firms focused on passenger and commercial vehicles, the impact of JLR’s loss of volumes is “more pronounced”, S&P said, as it expects JLR to account for more than 80% of Tata Motors PV’s earnings going forward.
“Path of recovery remains uncertain. We believe a recovery in JLR’s earnings is subject to a series of uncertainties both related to market conditions and to the consequences of the cyberattack.”
S&P also downgraded JLR’s outlook to ‘negative’ and said that there could be bigger implications from the attack which are not currently factored into its estimates, such as increased legal costs, impact of brand reputation and delays in new model launches.
While JLR has resumed production, the ramp up to full capacity will likely be gradual, S&P said adding that U.S. tariff-related headwinds and launch delays could pose further risks.
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)
