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, 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.
It posted a 47% jump in its consolidated net profit at ₹9,756 crore for the quarter ended March 2022, mainly on account of higher income. Revenue from operations, meanwhile, rose 38% to ₹69,323 crore for the three months period of January-March as against ₹50,028 crore in the last year period.
Tata Steel shares have declined about 27% in a year's period, whereas the Tata Group stock has is down more than 18% in 2022 (year-to-date or YTD) so far.
