Tata Steel to consider stock split, dividend

The Board of Tata Steel will consider a stock split and recommend a dividend at the board meeting to be held on May 3.

The company, in an announcement, said the board would consider a proposal for sub-division of the equity shares having a face value of ₹10 each in such manner as may be determined by the Board of Directors.

The proposal would be subject to approvals from regulators and shareholders of the company, it added.

The stock split will improve trading liquidity and make the stock more affordable. In a stock split, the number of outstanding shares will increase, and the price per share will come down proportionately. At the same time, the company’s market capitalisation and the value remains the same since there is no issuance of additional shares.

Shares of the company had rallied substantially with a series of acquisitions and the sharp spike in steel prices across the globe on the back of the Russia-Ukrine conflict. Tata Steel stocks had zoomed from an average price of ₹1,085 in January to ₹1,319 last Wednesday.

Recently, Tata Steel Mining, the unlisted wholly-owned subsidiary of Tata Steel, acquired a controlling stake of 90 per cent in Rohit Ferro-Tech under the approved Resolution Plan of ₹617 crore under the Insolvency and Bankruptcy Code 2016.

Last month, it bought over ferroalloys producing assets of Odisha-based Stork Ferro and Mineral Industries for ₹155 crore in an all-cash deal. The company, early this year, acquired the struggling Neelachal Ispat Nigam for ₹12,100 crore. All these acquisitions will lead to additional revenue and a rally in the stock price in the coming days. It will be a sought reward for existing investors holding on to the stock through its difficult times, said an analyst.