Tata Steel shares rally for second day after stock split

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Shares of Tata Steel continued to surge more than 7% to 107 apiece on the BSE in Friday’s early trading deals, on the record day of its stock split in the ratio of 1:10. The stock had surged on Thursday when it started trading ex-split.

The company had fixed Friday, July 29, 2022 as record date for its stock split for the purpose of determining the eligibility of shareholders for the purpose of sub-division of its equity shares or stock split.

While announcing its Q4FY22 results in May this year, Tata Steel’s board also approved a proposal to split its shares in 10-to-1 ratio. “The Board considered the proposal for sub-division of 1 equity share of the Company having face value of 10/- each into 10 (Ten) equity shares having face value of Re 1/- each.”

A stock split increases the number of shares that are outstanding by issuing more shares to the current shareholders. Stock split decreases the market price of the individual shares, however, does not result in changing the market capitalization of the company.

Explaining the rationale behind the stock split decision, Tata Steel said that it is done to enhance the liquidity in the capital market, to widen shareholder base and to make the shares more affordable to small investors.

Earlier this week, the domestic steel major Tata Steel posted a 21% fall in its consolidated net profit to 7,714 crore for the April-June 2022 quarter (Q1 FY23) due to higher costs of materials and finance costs as compared to 9,768 crore in the year-ago quarter.

Its total income rose to 63,698 crore in the April-June 2022 period against 53,627.6 crore year-on-year (YoY). In a separate statement, the company said its consolidated steel production was at 7.74 million tonne (MT) in the first quarter of FY23, down 1.77 per cent from 7.88 MT in the same quarter a year ago. The company’s sales also fell to 6.62 MT in teh quarter from 7.11 MT in April-June FY22.

Part of Indian conglomerate Tata Group, Tata Steel is among the country’s top four steel producers and contributes around 18% to the total domestic steel production.

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