Tata Group’s steel maker Tata Steel is in focus during this week’s trading session. The company is set to announce its financial performance for the quarter ended June 30, 2022 (Q1FY23). At the same time, the shares of Tata Steel are also going to be ex-split before the record date. The company plans to sub-divide equity shares in the ratio of 1:10. On Monday, investors maintained buying sentiment in Tata Steel shares with quarterly results and stock splits being the main focus.
on BSE, Tata Steel shares closed more than 960.90 each 24.90 or 2.66%. Shares were near intraday high 966.15 each. Its market cap is approx. 1,17,342.75 crores.
Here are 10 key points to note about Tata Steel stock split,
1. Under the stock split of Tata Steel, one equity share whose face value is 10 each will be sub-divided into 10 equity shares of face value of Re 1 each. Hence, the ratio of 1:10 on equity shares.
2. The company has fixed July 29 as the record date for determining the eligibility of shareholders for share split.
3. As per market guidelines, a company can fix a record date for corporate actions such as dividend, stock split and bonus issues only after obtaining approval from the shareholders. Tata Steel has received the approval of the shareholders at the 115th Annual General Meeting of the company held on 28th June, 2022.
4. With the date recorded for the stock split on July 29 (Friday), this means that the Tata Steel shares will be ex-split on July 28 (Thursday).
5. Under a stock split, the listed company increases the number of outstanding shares by issuing more shares to the existing shareholders. A stock split also reduces the market value of individual shares, however, it does not result in changing the market capitalization of the company. For example, the stock split ratio of Tata Steel is 1:10, which means that one equity share of one shareholder in the company will increase to 10 shares and the price of the shares on the pre-split date will also decrease further. This would allow a shareholder to have more shares in the company at a cheaper price.
6. One of the main advantages of stock splits is that these shares become more affordable for both existing and new investors. Also, the move boosts the liquidity of the listed company.
7. In general terms, ex-date means the date when a stock is trading without the benefit of corporate action, in this case, the stock split. The pre-partition date is one day before the record date.
8. The record date for a stock split means that the company will examine its records to identify eligible shareholders. This means – Shareholders who hold shares of the company in their demat account as on the record date are generally entitled to benefits like stock split, dividend, right share or bonus share.
9. However, if you are a new investor and want to be eligible for a stock split of the company, you should buy the shares two days before the record date of the corporate action. On BSE, Tata Steel is an ‘A’ group stock with settlement type ‘T+2’ which means trading date plus two days. So if you trade in a stock, the settlement of the action will show at least two business dates in your demat account. According to the Zerodha support portal, to be eligible for corporate action, a customer needs to purchase the shares by depositing the shares in the demat account on the record date at least two days prior to the record date.
10. As per BSE data, Tata Steel has a record 20,47,661 shareholders as of June 30, 2022. The number of fully paid-up equity shares held by the promoters and public shareholders is approximately 121.18 crore equity shares. Meanwhile, the number of shares held in demat form by promoters and public shareholders is approximately equal to 120.81 crore equity shares.
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