May22 , 2022

Tata Steel Announces 10-to-1 Stock Split As Q4 Profit Soars 47%

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Tata Steel Ltd. approved a proposal to split its shares in 10-to-1 ratio as the steel major posted 47% rise in consolidated net profit for the three months ended March.

Net profit for the January-March period stood at 9,756 crore, compared with 6,644 crore a year ago.

On Monday, Tata Steel scrip rose 2.04% to settle at 1,297 apiece on NSE. So far in 2022, the stock has risen nearly 14% (Year-to-Date).

The split would be subject to regulatory and statutory approvals. The record date will be decided by the Board and will be intimated to the exchanges soon, Tata Steel said Tuesday.

Revenue from operations, meanwhile, rose 38% to 69,323 crore for the three months period as against 50,028 crore in the last year period.

“Tata Steel has again demonstrated its ability to deliver stellar results despite heightened complexity in the face of Covid as well as geopolitical tensions. Our Indian business showed broad based growth across our chosen segments due to our sustained focus on customer relationships, our distribution network and our portfolio of brands supported by our agile business model,” said Tata Steel CEO and MD T V Narendran.

Tata Steel reported its highest-ever consolidated EBITDA (earnings before interest, tax, depreciation, and amortisation) at 63,830 crore for the fourth quarter, while India business EBITDA stood at 52,745 crore.

In India operations, the company achieved highest ever annual crude steel production of 19.06 million tons, with a growth of 13% year-on-year. It has also clocked highest-ever deliveries of 18.27 million tons.

For Europe business, revenues increased by 54% over last year to £8,876 million and EBITDA stood at £1,199 million.

Tata Steel said it is standing with a consolidated free cash flow was 27,185 crore despite an increase in working capital of 9,618 crore.

What is a stock split?

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 capitalisation 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.

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