Tata Steel has announced its plan to raise ₹3,000 crore through the issuance of non-convertible debentures (NCDs) via private placement. The fundraising move, approved by the board on February 14, is aimed at strengthening the company’s financial position while leveraging its strong market standing.
Non-convertible debentures (NCDs) are fixed-income instruments issued by companies to raise funds. Unlike convertible debentures, NCDs cannot be converted into equity shares, making them an attractive option for investors seeking stable returns. Tata Steel plans to issue 3,00,000 NCDs, each valued at ₹1,00,000, targeting eligible investors.
The proposed NCDs will be allotted on February 21, 2025, with a maturity date set for February 21, 2030. These debentures will be listed on the wholesale debt market segment of the Bombay Stock Exchange (BSE), ensuring transparency and liquidity for investors.
Tata Steel’s decision to raise ₹3,000 crore comes amid its strategic restructuring and operational improvements. The upgrade is largely driven by expectations of reduced losses at its UK operations and a return to profitability by FY26-FY27. The company successfully shut down both its UK blast furnaces in September 2024, with management anticipating a breakeven point in the latter half of FY26.
Despite the positive news of fundraising, Tata Steel’s share price closed 1.69% lower on the BSE at ₹134.40 apiece. The stock opened at ₹133.90, hit a high of ₹139.20, and touched a low of ₹133.35 during the day. This fluctuation indicates that while long-term investors might see potential in the company’s financial strategy, short-term traders reacted to broader market trends.
According to Reuters, Tata Steel currently has outstanding bonds worth over ₹12,800 crore, with ₹670 crore set to mature next month. The company’s financial restructuring aims to strengthen its balance sheet while ensuring long-term sustainability.
Tata Steel’s decision to raise ₹3,000 crore via NCDs is a significant move toward financial stability and operational efficiency. With improved credit ratings and strategic restructuring in place, the company aims to enhance profitability while managing its debt obligations.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Feb 14, 2025, 7:06 PM IST
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