Tata Steel stock split may make counter attractive, provide impetus to liquidity: Expert Vikas Sethi

Tata Steel’s decision to split stock may provide an impetus to the valuations of the company, however, it may not impact the balance sheet, but liquidity is likely to increase, market analyst Vikas Sethi of Sethi Finmart said on Monday while speaking to Zee Business. 

Sethi said, “Retail investors who were reluctant or find it expensive to enter in Tata Steel’s stock at Rs 1300-1400 per share levels may enter after the stock split.” He added that if share splits at a 1:5 ratio and the price comes down to Rs 250-300 per share level, it may become attractive for retail investors. 

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Tata Steel on May 3 will consider a proposal to split the stock and recommend a dividend along with results for the quarter ended March 31, the company said in a statement on Sunday. 

Without specifying the ratio of the stock split, it said the meeting on May 3 would consider a sub-division of the shares with a nominal value of 10 Indian rupees each. The split would be subject to regulatory and statutory approvals. 

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The stock on Monday surged 3 per cent and touched a day’s high level of Rs 1358.5 per share on the BSE intraday trade in an otherwise negative market. At around 12:30 PM, it was up over 1.5 per cent to 1339.65 per share on the BSE, as compared to a 2.33 per cent fall in S&P BSE Sensex. 

Tata Steel is one of the most undervalued stocks in the metal space, Sethi said, adding further that the demand for steel is splendid, and prices have grown. He added that the Indian steel maker has almost become debt-free. 

Terming metal stocks are in the sweet spot, the market analyst expects Tata Steel to report robust earnings in the fourth quarter of the financial year 2021-22. He also expects that metal stocks such as Vedanta JSW Steel, JSPL, Nalco, and Hindalco are in the best position to buy.