CRISIL Ratings upgrades ratings of TVS Holdings to 'AA+' with 'stable' outlook

CRISIL Ratings said that the rating upgrade reflects the improvement in the company's debt cover, due to expected lower debt.

The rating continues to factor in the healthy credit risk profile of its main subsidiary, TVS Motor Company [TVSM]. The growth momentum of TVSM will likely sustain over the medium term supported by healthy market position in the motorcycle and scooter segments.

The rating continues to reflect the healthy debt cover of TVSHL, reflecting ability to raise debt, the healthy credit risk profile of TVSM and the company's major shareholding in TVSM.

These strengths are partially offset by exposure to market risks and high reliance on dividends for debt servicing.

Factors like increase in market value of TVSM or sharp reduction in debt levels leading to continued strong debt cover and substantial Improvement in credit risk profile of key operating subsidiary, TVSM, could lead to a positive rating action.

However, a material decline in the market value of investments in TVSM on a sustained basis, or higher than expected debt levels including for supporting subsidiaries, impacting debt cover and a significant decline in the credit profile of TVSM, could be negative for the ratings of TVSHL.

TVS Holdings (TVSHL) [formerly Sundaram Clayton (SCL)] was a leading manufacturer of aluminium die-casting components. Until fiscal 2007, SCL's financials included the CV brakes business. With effect from March 28, 2008, the Madras High Court approved the de-merger of the brakes business into a separate company, Wabco India Ltd. The non-brakes business (aluminium die-casting) and investments in the TVS group entities remained with SCL. During fiscal 2012, SCL restructured its businesses, hiving off the non-automotive businesses into its erstwhile subsidiary, Sundaram Investments Ltd (SIL). In August 2023, the aluminium diecasting business of SCL was demerged into a separate entity, SCL DCD and SCL was renamed as TVSHL which retained the investments in TVS Motor Company (TVSM) and real estate entity TVS Emerald (TEL).

The scrip fell 2.81% to currently trade at Rs 9951.50 on the BSE.