S&P Global upgrades issuer ratings of Tata Power to 'BBB-'

S&P Global stated that it now expects Tata Power to be strategically important to Tata Sons. The change in assessment reflects the greater operational integration and cohesiveness within the Tata group in recent years.

In our view, this greater operational integration increases the longer-term commitment of Tata Sons to group entities as well as the incentive to provide support,' the credit rating agency said.

Tata Power's integration within the group has strengthened in particular from the execution of energy transition strategies by various group companies and Tata Motors' growth in the electric vehicle (EV) business. These strategies include setting up of solar power plants for Tata Motors, Tata Steel, Tata Electronics, among others.

Tata Power also assists with setting up the charging infrastructure to support Tata Motors' EV business and joint bidding with Tata Motors for commercial EV projects.

Our assessment does not presume Tata Sons will step in with extraordinary support for deleveraging or rating preservation. But we believe it will provide strong support in the event of credit stress, based on precedents. Tata Power also benefits from being part of the Tata group, particularly via enhanced funding access,' the credit rating agency added.

Tata Power is an India-based integrated power company with generation, distribution, and transmission businesses. The company has generation capacity of close to 14.7 GW, with a mix of thermal (including Mundra plant's 4.2 GW coal-fired capacity), hydro, wind, and solar power. It also holds minority stakes in Indonesian coal mines.

The scrip rose 0.50% to currently trade at Rs 424.30 on the BSE.