Tata Motors Fund Raising: The board of automobile company Tata Motors Limited has approved raising Rs 2,000 crore by issuing non-convertible debentures (NCDs) on a private placement basis. These NCDs will be issued in three tranches, each offering a fixed coupon rate of 7.65% per annum. Non-convertible debentures are fixed income instruments, which are issued for a fixed period and interest rates. These debentures cannot be converted into equity.
Companies use NCDs because it enables them to raise money without diluting any equity. Each tranche of Tata Motors NCD will have a fixed coupon rate of 7.65% per annum with annual interest payments. The first tranche will mature on March 26, 2027, the second on March 24, 2028 and the third on March 27, 2028. The proposed date of allotment for all three tranches is March 27, 2025.
Funds will be used for general corporate purposes
The funds raised by Tata Motors through NCDs are expected to be used for general corporate purposes including but not limited to research and development, capacity expansion and working capital requirements.
Tata Motors shares are up marginally on March 19. The stock closed at Rs 681.90 with a gain of 0.31 percent. The company's market cap is Rs 2.5 lakh crore. Brokerage firm Macquarie has maintained an 'outperform' rating for Tata Motors' stock. Also, the target price has been set at Rs 826 per share. After the decline in the stock price, Macquarie believes that Tata Motors now offers an attractive risk-reward opportunity. Tata Motors' stock has become cheaper by 28 percent in the last one year.
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