Standard & Poor’s Ratings Services (S&P) has raised its long-term corporate credit rating on Tata Motors to a better grade with less vulnerability of non payment based on the better performance of its British-arm Jaguar Land Rover (JLR).

The agency said it has raised its rating on the Mumbai-based company to ‘BB+’ from ‘BB’ with a stable outlook.

S&P has also raised the rating on Tata Motors’ US-dollar-denominated senior unsecured notes to ‘BB+’ from ’BB’

“We raised the rating to reflect the improvement in Tata Motors’ competitive position following the better performance of its 100 per cent subsidiary, Jaguar Land Rover Automotive PLC (JLR),” S&P Global Ratings credit analyst Mehul Sukkawala said in a statement.

JLR has launched new models successfully, extended existing ones, and expanded into new market segments, S&P added.

The British brand also helped strengthen Tata Motors’ financial position and its ability to withstand moderate volatility and the risks from the UK’s recent vote to leave the EU (Brexit), S&P said.

“JLR has improved its product portfolio over the past two years and we expect the company to maintain its strengthened position. New and updated models are in the pipeline, including a Range Rover Evoque convertible (launched in 2016) and a long-wheel base version of the Jaguar XF in China,” it added.

JLR’s new models launched over the past 15-18 months were well received in the market. In addition, volume growth has been broad-based across different regions, especially in 2016, it said.

“JLR’s improved competitive position will enable Tata Motors to register good operating performance over the next two years in the form of revenue growth and higher EBITDA margin,” Sukkawala said.

At the same time, Tata Motors’ India operations have recovered with the improving economic environment, cyclical turnaround for commercial vehicles, and new product launches in the passenger vehicle segment, he added.

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