Tata Motors Approves ₹2,000 Crore Fundraising Through NCDs

Tata Motors, a leading automotive manufacturer, has approved raising ₹2,000 crore through the issuance of Non-Convertible Debentures (NCDs) on a private placement basis.

Understanding Non-Convertible Debentures (NCDs)

NCDs are fixed-income instruments issued by companies to raise long-term capital. Unlike convertible debentures, NCDs cannot be converted into equity shares and are typically offered for a specific tenure with a fixed interest rate. Companies prefer NCDs as they allow capital acquisition without diluting equity ownership.

Details of Tata Motors' NCD Issuance

The approved NCD issuance will occur in three tranches, each carrying a fixed annual coupon rate of 7.65%.

• Tranche I: Matures on March 26, 2027.

• Tranche II: Matures on March 24, 2028.

• Tranche III: Matures on March 27, 2028.

The proposed deemed date of allotment for all three tranches is March 27, 2025.

Purpose of Fundraising

The funds raised through this NCD issuance are expected to be utilized for general corporate purposes, including research and development, capacity expansion, and working capital requirements.

Brokerage Firm's Perspective

Macquarie, a global financial services group, has maintained an 'Outperform' rating on Tata Motors, setting a price target of ₹826 per share. This suggests a potential upside of approximately 21.7% from the current market price.

The brokerage firm cites strong demand in the US market as a key driver for the stock's growth and believes the risk-reward remains attractive following recent underperformance.

Key Factors to Watch

Macquarie has identified several factors to monitor concerning Tata Motors:

• Management's Confidence: The company's management is confident in achieving Jaguar Land Rover's (JLR) net cash balance sheet by March 2025, supported by earnings progression during the quarter.

• Market Outlook: A positive growth outlook for the US market, along with signs of recovery in the European Union and the United Kingdom, though partially offset by volume risks in China.

• Domestic Market Share: Tata Motors has been gaining market share in the domestic commercial vehicle (CV) segment.

Stock Performance

As of March 19, 2025, Tata Motors' shares are trading at ₹681.30, reflecting a 0.18% increase. However, the stock has experienced a 9% decline so far in 2025.

Conclusion

Tata Motors' decision to raise ₹2,000 crore through NCDs underscores its strategic approach to secure long-term funding for corporate initiatives. The company's robust plans for growth and market confidence, as reflected by positive brokerage ratings, indicate a promising outlook. Investors and stakeholders will closely monitor the deployment of these funds and the company's performance in both domestic and international markets.