Tata Steel shares climb 2% on fundraising plan; up 5% in 6 sessions

Shares of Tata Steel gained nearly 2% in early trade on Tuesday after the country’s largest steelmaking company said that its board approved ₹2,150 crore of fundraising through the issue of non-convertible debentures (NCDs). This would be Tata Steel’s second bond sale in the last five months after it raised ₹2,000 crore by allotting 20,000 NCDs of face value of ₹10 lakh each in September last year.

In a late night release on Monday, Tata Steel said that its committee of directors (constituted by its board of directors), at its meeting on February 20 considered and approved the issue of NCDs on a private placement basis to eligible investors. The company proposes to issue 2,15,000 fixed rate, unsecured, redeemable, rated, and listed NCDs of face value ₹1,00,000 each aggregating to ₹2,150 crore.

The NCDs, which carry fixed rate coupon, will be listed at the wholesale debt market segment of BSE. The date of allotment of debentures is February 27, 2023 and the maturity date is February 25, 2028. The debentures have been rated “AA+” by India Ratings and “AA+” by CARE Ratings. 

Tata Steel shares have been rising for the last six sessions and added nearly 5% during this period amid reports that the Tata Group company is planning to raise ₹4,000 crore via bond sale.

Continuing its gaining streak, the steel heavyweight opened at ₹112.70 against the previous closing price of ₹112.35 on the BSE. In the first two hours of the trade so far, the largecap stock rose 1.5% to ₹114.05, while the market capitalisation increased to ₹1.40 lakh crore. Tata Steel shares have risen 38% against its 52-week low of ₹82.71 touched on June 23, 2022, while the counter hit a 52-week high of ₹138.63 on April 6, 2022.

In the recently concluded October-December quarter of 2022, Tata Steel posted a surprise consolidated net loss of ₹2,223.84 crore against a profit of ₹9,572.67 crore in the same quarter last year, dented by a sharp drop in realisations and spreads in Europe. The revenue from operations fell 6.08% to ₹57,083.56 crore from ₹60,783.11 crore in the corresponding period last year. EBITDA fell sharply to ₹4,154 crore from ₹15,853 crore in the year ago period, while the EBITDA margin stood at around 7%.

As per the exchange filing, the company spent ₹3,632 crores on capital expenditure during the quarter. The net debt stood at ₹71,706 crore as of December 31, 2022.

India deliveries stood at 4.74 million tonnes and were up 7% YoY primarily driven by 11% growth in domestic deliveries, which has also enabled an improvement in product mix. However, the company’s Europe business was impacted due to slowdown in demand amid recession concerns, which weighed on steel prices, while elevated energy costs also affected its performance.

Going ahead, the company expects pick up in steel prices across key regions on improved China demand outlook and sustained spending on infrastructure in India. It also aims to achieve net zero carbon by 2045.