Tata Motors gets ₹1K Cr NCD Issue Approval; Cancels it Later, Causing Stocks to Drop

KOLKATA: On Tuesday, Tata Motors had announced that a board-constituted committee has approved an issue of non-convertible debentures (NCDs), on a private placement basis, to raise up to 1,000 Crore.

In a regulatory filing, the company shared that this issuance would involve up to 10,000 rated, listed, unsecured, redeemable, non-convertible debentures of face value 10,00,000 each, at par, aggregating up to 1,000 Crore across three tranches — of 500 Crore, 300 Crore and 200 Crore.

The tranches of 500 crore, 300 crore and 200 crore would have been due for redemption on September 30, 2022, November 28, 2022 and December 29, 2022, respectively. “The interest payable will be subject to discovery after open book bidding on the BSE platform,” Tata Motors had added, in that announcement.

But, only 2 days later, on May 7, the company announced the withdrawal of NCD issuance. It explained that this was in view of the higher cost expectations from the market participants due to the tight finance market conditions, the company said in another exchange filing.

The company, however, highlighted in the filing that it has no liquidity constraints and will consider another issue once market conditions improve.

“Pursuant to the provisions of Regulation 30 (2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Regulations’) read together with Schedule III of the Regulations, we hereby inform that the Company has decided to withdraw the issue for private placement of unsecured NCDs in view of the higher cost expectations from the market participants due to the tight money market conditions. The company continues to have sufficient liquidity and would consider issuance of NCDs at an appropriate time and under normalized market conditions with necessary approvals,” Tata Motors explained in the filing.

Share price of Tata Motors slipped 2.36% intra day to ₹84.85 compared to the previous close of ₹82.50 on BSE after this announcement. The stock has lost 2.47% in the two days since.

Tata Motors stock opened with a gain of 2.67% at ₹84.70 today. It closed 1.76% lower at ₹81.05 on BSE. On Nifty, the stock ended 1.58% lower at ₹81.20.

The large cap stock stands higher than 20 day moving averages but lower than 5 day, 50 day, 100 day and 200 day moving averages. Market capitalisation of Tata Motors fell to ₹29,157 Crore in trade today.

The automobile industry had reported zero domestic sales and limited exports in April, for the first time in history, as factories remain closed amidst the nationwide lockdown that was announced in March 25.

Auto industry representatives, had also written to the Ministry of Home Affairs to allow the sector to resume operations along with other suggestions to support the industry through these tough times. These requests were stated in a joint submission by the Society of Indian Automobile Manufacturers (SIAM), Automotive Component Manufacturers Association of India (ACMA) and the Federation of Automobile Dealers Associations (FADA).

 

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