In the intra-day trading on Wednesday, shares of Tata Steel experienced a 2% decline following the approval from its board for a fund-raising initiative worth Rs 2,700 crore through the issuance of non-convertible debentures (NCDs).
This decision comes amid the company’s efforts to bolster its financial standing. The NCDs, with a face value of Rs 1 lakh each, are set to be allotted on March 27 through a private placement basis.
This marks Tata Steel’s third NCD issuance in the span of 1.5 years, demonstrating its strategic approach towards capital generation. In February 2023, the board had greenlighted a similar move to raise Rs 2150 crore, followed by another issuance in September 2022, raising Rs 2000 crore via NCDs.
The company disclosed in a regulatory filing on March 18 that Tata Steel UK had made the decision to halt operations of the Coke Ovens at its Port Talbot plant in Wales due to a deterioration in operational stability. Tata Steel UK further elaborated that it intends to augment imports of coke to mitigate the ramifications of the coke oven closures.
Here What’s Analyst Predict on Tata Steel
“Tata Steel’s commitment to sustainability, cost optimisation, and product innovation positions it well to capitalise on the rising demand for steel in the infrastructure and automotive sectors,” said Atul Parakh, CEO of Bigul
Parakh also added that, with a diversified product portfolio and strong brand equity, the company’s prospects appear promising, provided it effectively manages challenges like raw material volatility and competitive pressures. Investors with a long-term perspective may find value in Tata Steel’s stock.
Commenting on the same Rajesh Sinha Sr. Research Analyst Bonanza Portfolio said that, “the reason behind fund raising is not very clear but we believe that the fund can be utilized in debt reduction or for investments in infrastructure, technology upgrades or acquisitions to strengthen its position.”
“We believe that Tata Steel’s business is well placed from the increased share of India assets on account of a likely volume ramp-up in FY25 and FY26 from the completed Kalinganagar Phase II capacity expansion to 8 million tonnes per annum, resulting in increased EBITDA per tonne in FY25 and FY26,” said Shreyansh V. Shah, Research Analyst, StoxBox.
Shah also added that the aim of the steel manufacturer to raise funds is basically to support the opex as well as the capex plans as the management foresees improving demand for its products in the medium to long term. With the hiving of its UK plants, the company is strategically focussing on its domestic operations where they are seeing more visibility in their topline growth.
