Shares of Tata Motors Ltd fell on Wednesday after S&P cut credit rating for the automaker and its British luxury car unit Jaguar Land Rover (JLR), citing weaker-than-expected profitability at JLR.
Shares declined as much as 3.2 percent to 170.10 rupees, with more than 4.1 million shares changing hands by 0440 GMT, compared with their 30-day average of 16.2 million shares.
S&P Global Ratings on Tuesday https://www.bseindia.com/xml-data/corpfiling/AttachLive/77a50344-91e6-4afd-966e-3101511d5c6d.pdf cut its rating on issuer credit and senior unsecured notes to 'BB-' from 'BB' for both Tata Motors and JLR. The ratings remain on negative watch, reflecting the uncertainties for JLR from a fast-approaching Brexit deadline, S&P said.
The company said in October end it plans to cut costs and improve cash flows under its turnaround plan for JLR, which has been hit hard by trade tensions between China and the United States, low demand for diesel cars in Europe and worries over Brexit.
JLR's higher presence in the UK exposes it to the fallout of a potential "no-deal" Brexit, which could further diminish the likelihood of a turnaround for the company, the rating firm said.
S&P also expects Tata Motors' leverage to deteriorate over the next 12-18 months, given its ongoing cash losses at JLR despite turnaround plans for the unit.
Stock has shed more than 59 percent this year as of Tuesday's close.