25 Jul , 2022 By : Kanchan Joshi
Shares of Tata Steel will trade ex-split this week on Thursday, day ahead of its record date for the stock split it had announced in the ratio of 1:10, which has been fixed on Friday, July 29, 2022 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, the company'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 Rs10/- each into 10 (Ten) equity shares having face value of Re 1/- each, subject to regulatory/statutory approvals as may be required and the approval of the shareholders 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.
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.
A company engages in stock split decision to make its stock more affordable if its price levels are very high, which in thus would lead to increase in liquidity in the stock.
Tata Steel is among the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum. It is one of the world's most geographically diversified steel producers, with operations and commercial presence across the world.
Tata Steel shares have declined about 27% in a year's period, whereas the Tata Group stock has is down more than 17% in 2022 (year-to-date or YTD) so far.
Tata Group chair, Natarajan Chandrasekaran, earlier this month warned that the company could be forced to shut down Tata Steel’s plants in the UK without a British government subsidy deal worth around 1.5 billion pounds. Speaking to The Financial Times, the Tata Group chief said the company had been in talks with the government over its decarbonisation plans and a deal would have to be struck by next year to save the country’s steelworks.
0 Comment