The board of Tata Motors Ltd. has given the green light for raising Rs 500 crore through the issuance of non-convertible debentures (NCDs) to eligible investors via private placement.
The Mumbai-based automaker intends to release 50,000 NCDs with a face value of Rs 1 lakh each in two separate tranches, offering a coupon rate of 7.08% per annum, as stated in an exchange filing on Friday. The first tranche will consist of 30,000 NCDs, while the remaining will be issued in the second tranche.
The specific reason for this debt fundraising has not been disclosed. The NCDs, which carry a ‘Crisil AA+/Stable’ rating, will be available for trading on the wholesale debt market segment of the National Stock Exchange (NSE).
The planned date for allotment for both tranches is set for May 13, 2025, with maturity dates of May 11, 2028, and May 12, 2028, respectively.
A non-convertible debenture is a type of fixed-income security that offers structured returns to investors. Since NCDs are unsecured and not backed by physical assets, market participants assess the issuing company’s creditworthiness and ability to service debt before allocation.
This marks the second occasion in two months that Tata Motors has opted to pursue debt funding.
Previously, on March 27, the company successfully raised Rs 2,000 crore by issuing 2 lakh NCDs to HDFC Bank Ltd., Reliance General Insurance Co., SBI Short Term Debt Fund, and others in multiple tranches, with a coupon rate of 7.65%.
It’s noteworthy that Tata Motors’ operations in India became net debt-free in FY24, and its UK-based subsidiary, Jaguar Land Rover, achieved the same status in FY25. The company is now preparing for a demerger later this year.
On the Bombay Stock Exchange (BSE), shares of Tata Motors closed up by 1.2% at Rs 651.85 each, in contrast to a 0.32% increase in the benchmark Sensex.
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