The board of Tata Steel Ltd. will consider a proposal to split its equity shares bearing a face value of Rs 10 apiece, the steelmaker said in an exchange filing.
The decision will be subject to regulatory, statutory and shareholder approvals, the company said, without providing details such as the split ratio. Shares of the company last traded at Rs 1,319.5 in Mumbai on April 13. Indian markets were shut on Thursday and Friday for local holidays.
Tata Steel board will also consider the company’s quarterly and annual earnings at the meeting along with a dividend payout, it said.
The Board will also recommend dividend, if any, for the financial year ended March 31, 2022, on that day.
The company plans a sub-division of its equity shares having a face value of Rs 10 each, in such manner as may be determined by the board of directors. subject to regulatory/statutory approvals as may be required and the approval of the shareholders of the company, the statement said.
A stock split leads to increase in liquidity of the stock. The stock also gets more affordable for retail investors since the company divides the existing shares into new shares. However, market cap of the firm remains the same.
Tata Steel is the third-largest company of the salt-to-software Tata Group by market capitalisation after Tata Consultancy Services and Titan Company Ltd.
Shares of all the top six listed Tata companies by market cap — which also include Tata Consumer Products Tata Power Ltd and Tata Motors — barring Tata Steel, have their stocks subdivided below the face value of Rs 10.
A stock split usually creates higher liquidity in the market and brings down the cost of ownership of the shares on a notional basis.
The proposed subdivision of shares follows two years of stupendous financial performance which is reflected in the stock price.
In third quarter of the last fiscal, the India’s largest steel manufacturer reported a 139 per cent year-on-year rise. Its consolidated net profit at Rs 9,572 crore against a net profit of Rs 4,011 crore in the year-ago period.
Sequentially, the steel maker had reported a profit of Rs 12,548 crore in the September quarter. Consolidated revenues for the quarter rose about 45 per cent YoY to Rs 60,783 crore compared with Rs 41,935 crore in the year-ago quarter.
On a QoQ basis, the revenues were broadly stable as improvement in net realisations more than offset the drop in volumes, the company said .
The company’s consolidated earnings before interest, taxes, depreciation, and amortisation or EBITDA stood at Rs 15,853 crore.
Meanwhile, Sensex plunged 1150.25 points to 57,188 and Nifty slipped 309 points to 17,166 in early trade today.