Tata Steel spurts on reports of Rs10,000-crore fund-raising plan

The Tata Steel scrip rose over one per cent to Rs551.37 in morning trade on the Bombay Stock Exchange (BSE) today on reports that the company was in talks with investors to raise over Rs10,000 crore (around $2.2 billion) in equity and debt.

Tata Steel, the world's eighth-largest steel maker, is in talks with investors to raise Rs5,000 crore ($1.1 billion) in equity and another Rs5,000 crore in debt, the DNA newspaper reported today, citing unnamed sources.

The Bombay Stock Exchange (BSE) saw over a million shares changing hands against an average daily volume of 2.56 lakh shares over the past one quarter. Tata Steel had ended the previous week down 0.55 per cent at Rs545.50 a share. Trading volume on Friday was around 296,308 shares.

The stock ended down Rs0.95 at Rs544.65 after hitting a high of Rs552.60 and a low of Rs 540.10 during the day. The stock had hit a 52-week high of Rs600 on 17 October 2009 and a 52-week low of Rs148.65 on 6 March 2009.

Tata Steel has an equity base of Rs887.21 crore of Rs10 face value shares. The current price of Rs551.35 discounts the company's Q2 September 2009 annualised EPS of Rs40.70 by a PE multiple of 13.54.

The debt issue is expected to follow equity dilution, according to the report.