As per the data available on the National Stock Exchange website till 1700 hrs, the Tata Steel FPO received bids worth 2.3 crore shares, against 4.8 crore equities on offer, which according to marketmen, is a great response, for any issue on the second day.
"The FPO has generated a smart demand in the first two days and we expect the issue to get oversubscribed by at least 4-5 times till the final day," SMC Capitals Strategist and Head of Research Jagannadham Thunuguntla said.
In the qualified institutional investors’ category, the offer was subscribed 0.67 times, while it got 0.20 times subscribed in the retail individual investors’ category.
However, some analysts feel that the FPO may not garner overwhelming response as the investors may find it worthwhile to wait for the Maharatna PSU SAIL's FPO which is round the corner.
"SAIL's balance sheet is strong enough to fund the vast capex plan to double capacity. Owing to its huge cash reserves and upcoming follow on public (FPO) offer, net debt-to-equity would be measurably low, despite the huge capex", a brokerage firm Anand Rathi Research said in a note.
The company had fixed the price band of Rs 594-610 a share for its FPO offer, which will close on January 21.
With the FPO of 5.7 crore shares, which includes 83.25 lakh anchor investor shares, the company will garner Rs 3,477 crore at the higher end of the price band, while at the lower end of price band, it will raise Rs 3,385 crore.
Tata Steel intends to use the FPO proceeds to fund its ongoing expansion project in Jamshedpur as well as for repaying its debt.
Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, Deutsche Equities (India) Pvt Ltd, HSBC Securities And Capital Markets (India) Pvt Ltd, RBS Equities (India) Limited, SBI Capital Markets Ltd, Standard Chartered Securities (India) Ltd are the book running lead managers to the offer.
In November, the Tata Steel board had approved a proposal to raise up to Rs 7,000 crore (USD 1.5 billion) through various instruments. Subsequently, on December 24, the company secured shareholders' nod to raise a maximum of Rs 5,000 crore.