Tata Steel Shares Trade Ex-Split; Good Opportunity to Buy The Tata Stock?

Tata Steel's stock split is 1:10, meaning a shareholder's one equity share will become 10 shares, and the price of the shares on the ex-split date will drop. 

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.

When a company's share price is high, it divides its stock so small investors may afford it. Tata Steel stock will attract more investors as it gets cheaper, increasing trading volume.

Tata Steel declared a consolidated profit after tax (PAT) of Rs 7,765 crore for the quarter ended June 2022. The net profit was lower by 12.8 per cent, compared to Rs 8,907 crore recorded a year back. 

The performance for the quarter was impacted by the higher pet coke prices which resulted pushed up operating costs, while the export duty imposed by the government choked the exports which had a negative impact on the volumes. 

We have a lukewarm view of the company in the short- to medium-term since steel prices are cooling off, global demand is low due to central bank rate rises, and the GOI export tariff is generating a supply shortage in local markets.

Long-term investors with a moderate to high risk appetite can buy the stock on dips as long as demand stays favourable and Indian steelmakers benefit from China's steel output cuts and inexpensive iron ore and labour costs.

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