Tata Steel FPO opens on Jan 19

Last week, Shekhawati Poly delivered over 58% gains on its debut session. Before that it marked a high of Rs 69 against its offer price of Rs. 30, but thereafter, it hit lower circuit of 20% and last week, it close at Rs 30.45. This shows that many recent issues that managed to close with arranged funds have rescued its supporters on the listing day but thereafter, left the counter to the mercy of market operators.

The issue of Midvalley Entertainment that closed on Wednesday got an overall subscription of 4.03 times (QIB 0.35 times, HNI 4.68 times and Retail 9.01 times). C Mahendra is getting listed this week.

The secondary market has slipped sharply in past two weeks, losing 1649.46 points and bringing the primary market under pressure. Amidst the turmoil, IDFC is offering Infra Bonds that has AAA ratings and a yield of over 13 to 17 per cent depending on the tenure. It is a welcome step that the Tata group is planning an FPO for its steel major this week that would bring rewards for investors in medium to long term.

Tata Steel Ltd, promoted by Tata Sons Ltd, is India's largest private sector steel companies with a steel production capacity of approximately 27.2 mtpa. It has a presence across the entire value chain of the sector that includes even mining and processing iron ore and coal for its steel production. The company is the seventh largest steel company globally in terms of crude steel production volume in 2009.

In 2010, its operations in Europe and India represented 62.9% and 28.8%, respectively, of its total steel production. The company serves the construction, automotive, aerospace, consumer goods and material handling and general engineering industries.

It is coming out with a FPO of 5.7 crore equity share of Rs. 10 each within a price band of Rs. 594- 610 to mobilize around Rs. 3400 crore. The funds so mobilized will be used partly to finance the Company's share of capital expenditure for expansion of existing works at Jamshedpur and partly to retire debt besides other general corporate purpose. For H1 of current fiscal, it earned a net profit of Rs. 3758.42 crore on a turnover of Rs.

56713.61 crore. For the entire 09- 10, the company posted a loss of Rs. 2120.84 crore on a turnover of Rs. 103578.97 crore. Thus, the company is out of the woods now and its global acquisitions are bearing fruits.

This book building process opens on Jan 19 and closes on Jan 21. Shares will be listed on BSE and NSE. Lead BRLMs for this offer are Citigroup Global Markets India Private Limited, Deutsche Equities India Private Limited, HSBC Securities & Capital Markets Pvt Ltd, Kotak Mahindra Capital Company Limited, SBI Capital Markets Limited, Royal Bank of Scotland Plc, and Standard Chartered Securities (India) Limited. Registrar to the issue is Link Intime India Pvt. Ltd. Anchor Investor's book will open one day prior to the main offer.