The bidding for Tata Steel's FPO started on Jan 19 and will close on Jan 21. Anchor investors alone managed to raise a whopping Rs. 508 crore paving the way of other serious stock buyers to shed any apprehension they have on the company.
The amount raised from the FPO will be about Rs. 3385.80 crore to Rs. 3477 crore at the lower and upper band. The amount raised is intended to be utilized in various expansion efforts and made use of to generate more funds. Rs. 1875 crore will be to part finance the Rs. 16372 crore expansion at Jamshedpur; Rs. 1090 crore will be used for the payment of redemption amounts on maturity of certain redeemable non-convertible debentures issued by the company on a private placement basis due on May 2011; and the rest for general corporate purposes.
Consolidated Earnings Per Share (EPS) for the twelve months ended September 2010 of Tata Steel works out to Rs. 69.9. At a price band of Rs. 594 to Rs. 610, the price-earnings ratio works out to 8.5 to 8.7 times.
Tata Steel has appointed seven banks to manage the issue, namely Citi Bank, Deutsche Bank AG, Royal Bank of Scotland Plc , Kotak Mahindra Bank, SBI Capital Markets, Standard Chartered Bank Plc and HSBC Bank.