Renewed investor confidence in TATA Motors, following a robust performance by the company in the last three quarters, may induce it to issue more shares under the differential voting rights banner for raising funds.
The country’s biggest vehicle maker is exploring various means of raising funds to meet capital requirements and cut debt. TATA Motors recently said it would explore the possibility of raising funds through issue of shares, bonds, debenture, warrants and other equity linked instruments in domestic and international markets in one or more tranches. The company recently received shareholders’ approval to raise INR 4,700 crore. The company has to repay debt of INR 8,000 crore this year, besides meeting capital expenditure of INR 2,500 to INR 3,000 crore on a standalone level.
As the company’s shares are carrying better valuations, compared to last year, the street is expecting TATA Motors to launch DVR shares. Six months ago, shares in TATA Motors were trading at around INR 780 levels. Since then, it has rising with continued growth in the company’s performance. Rating agencies and brokerages have also upgraded the company’s outlook and recommended a buy on the stock.
Mr C Ramakrishnan CFO of TATA Motors told analysts that “(Issue of DVR shares) surely is an instrument that we will look at, as it is one of the options the company has today, and the approval we have taken from the shareholders enable us to allow issuance of ‘A’ ordinary shares as well. Depending on the overall dilution and overall pricing levels, we will look at these options.”
The market is expecting issuance of USD 500 to USD 700 million worth of DVR shares, but the company management remained non committal on it. From the issue price of INR 305 in late 2008, which later dropped to INR 280 on the BSE in March last year.
