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Shares of Tata Steel started trading ex split in Thursday's deals, a 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. The stock surged over 3% to 99 apiece on the BSE in opening deals.

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 10/- each into 10 (Ten) equity shares having face value of Re 1/- each."

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.

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 quarter 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). Its expenses, which included the cost of materials consumed and the finance cost, increased to 51,912 crore as against 41,490.8 crore in same quarter last year.

Tata Steel CEO and MD T V Narendran said April-June has been a challenging quarter for the global and Indian economy with rising interest rates, supply chain constraints and slowdown in China due to COVID-19.

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.

 

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