Tata Motors rises 4.5% after rights issue gets oversubscribed
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Mumbai: Shares of Tata Motors Ltd rose as much as 4.5%, the sharpest gain since 10 February, on Friday after its rights issue got an encouraging response from its shareholders.
Shares of Tata Motors Ltd—DVR rose as much as 3.6% to Rs.306.
Tata Motors rights issue was subscribed 1.21 times and the company collected an amount of Rs.9,040.56 crore.
The ordinary shares were subscribed 1.17 times for an amount of Rs.7,956.73 crore, shares with differential voting rights were subscribed by 1.51 times for an amount of Rs.1,083.83 crore, the company said.
Attractive pricing helped the rights issue, Mint quoted Bharat Gianani, an analyst at Angel Broking Ltd. A gradual but steady improvement in the standalone operations of the automaker coupled with prospects for higher sales by its Jaguar Land Rover Automotive Plc. unit have boosted investor confidence, he said.
The proceeds from the share issue are intended to be used for funding expenditure towards plant and machinery, research and product development, repayment in full or in part of certain long-term and short-term borrowings, and general corporate purposes.
The issue will lead to an equity dilution of 5.22% and shore up promoter’s holding to 37.76% from 34.33%. The issue price for the rights issue had been set at Rs.450 for ordinary shares and Rs.271 for shares with DVR. Existing shareholders were eligible to purchase six shares for every 109 held.
At 10.54am, Tata Motors was trading at Rs.507.95 on BSE, up 4% from its previous close, while Sensex rose 1.4% to 26,960.38 points.
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