Tata Steel share split record date 2022: Know what shareholders will get

Tata Steel share split record date news: Tata Steel has announced to split its stock. One of the top global steel companies, Tata Steel is splitting its stock in the 1:10 ratio. It means that every shareholder will get 10 shares for every single holding.

Tata Steel share split record date 2022: Tata Steel has fixed July 29 as the record date to determine the eligibility of shareholders for the split of shares having a face value Rs 10 each.

With a market cap of Rs 1,14,302 crore, as per BSE on Friday, Tata Steel is a large-cap corporation that operates in the ferrous metals segment of the country.

Tata Steel share split history

Tata Steel was founded in 1907. The company is splitting its share first time since January 1996.

What is stock split?

A stock split is a corporate action that alters the existing shares of a company. When a company announces to split its stock, the number of outstanding shares increases while the price of each share decreases.

Tata Steel stock split

Accordingly, Tata Steel share price will come down by one-tenth on the day of the split. For example, if Tata Steel share price is Rs 1,000 apiece on the day of the split, it will come down to Rs 100 apiece and the face value will be Re 1 per share.

If an investor has 100 shares of Tata Steel of Rs 1,000 each in his demat account, the number of shares will multiply by 10 while the price will come down in the same ratio on the date of split. The total quantity of shares in his demat will now be 1,000 of Rs 100 each.  

What stock split indicates?

A stock split is an indicator of the future growth of the company. The intention behind the stock split is to increase liquidity in the capital market, resulting in wealth gains for investors.

Besides enhancing liquidity, stock split also widens the shareholder base.

It is also observed that when the share price of a company is high, it splits its stock to make the shares more affordable to small investors.

Why Tata Steel splitting its share?

Domestic rating agency ICRA recently released a report wherein it said that a sharp rise in commodity prices along with increased competition will have an adverse impact on the profitability of the construction industry which is already battling with input cost pressure due to a considerable rise in major commodity costs, particularly steel and cement. Companies could see a decline in operating profitability by 100-200 basis points in the current fiscal.

In the Tata Steel case, the stock split will help the company to increase liquidity, thus beating the impact of rising commodity prices on profitability to some extent.

Another argument is that Tata Steel was seeing a continuous decline in the trade volume for the last few years, meaning that the stock was losing its charm. Once the stock is altered and becomes cheaper, it will attract more investors and the trading volume will increase