With intentions to raise ₹3,000 crore through NCDs, Tata Steel’s share price dropped 1.39% to ₹134.35. Despite short-term market swings, stability is intended to be increased through strong credit ratings and financial restructuring.
Tata Steel has said it will use a private placement to issue non-convertible debentures (NCDs) to earn ₹3,000 crore. Approved by the board on February 14, the fundraising initiative aims to leverage the company’s excellent market position and improve its financial status.
Details of the NCD Issuance:
Companies issue non-convertible debentures (NCDs), fixed-income securities, to raise capital. NCDs are a desirable choice for investors looking for steady returns because they cannot be converted into equity shares in contrast to convertible debentures. Tata Steel intends to target qualified investors with 3,00,000 NCDs worth ₹1,00,000.
On February 21, 2025, the planned NCDs will be distributed, and on February 21, 2030, they will mature. Investors will be guaranteed transparency and liquidity since these debentures will be listed on the Bombay Stock Exchange’s (BSE) wholesale debt market segment.
Why Is Tata Steel Raising Funds?
Tata Steel’s move to raise ₹3,000 crore coincides with its operational and strategic reorganizations. Expectations of lower losses in its UK businesses and a return to profitability by FY26-FY27 are significant factors behind the upgrade. In September 2024, the company successfully closed both blast furnaces in the UK, and management expects to break even in the second part of FY26.
Despite the good fundraising news, Tata Steel’s share price ended the day 1.69% down on the BSE at ₹134.40 a share. The stock began the day at ₹133.90, peaked at ₹139.20, and then fell as low as ₹133.35. This variation suggests that short-term traders responded to general market movements, but long-term investors may have recognized the potential in the company’s financial plan.
Reuters reports that Tata Steel now has over ₹12,800 crore in outstanding debts, with ₹670 crore due to maturity next month. The company’s financial reorganization goal is strengthening the balance sheet while maintaining long-term viability.
An essential step toward operational effectiveness and financial stability was taken by Tata Steel when it decided to issue ₹3,000 crore through NCDs. The corporation wants to increase profitability while managing debt commitments with better credit ratings and strategic reorganization.
