Tata Steel Ltd. agreed to a proposal to split its stake at a 10-to-1 ratio as the steelmaker posted a 47% increase in consolidated net profit for the three months ended March.

Net profit for the January-March period was recorded at Rp9,756 crore, compared to Rp6644 crore a year ago.

On Monday, script Tata Steel rose 2.04% to settle at Rp1,297 each on the NSE. So far in 2022, the stock has gained nearly 14% (Year-to-Date).

The split will be subject to regulatory and statutory approval. The listing date will be decided by the Board and will be announced to the stock exchange soon, Tata Steel said Tuesday.

Revenue from operations, meanwhile, rose 38% to Rp69,323 crore for the three month period compared Rp50,028 crore in last year period.

“Tata Steel has once again demonstrated its ability to deliver outstanding results despite the increased complexity of dealing with Covid as well as geopolitical tensions. Our business in India is demonstrating broad based growth across our select segments due to our continued focus on customer relations, distribution network and portfolio our brand is underpinned by our agile business model,” said Tata Steel and MD TV CEO Narendran.

Tata Steel reported its highest consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) in Rp63,830 crore for the fourth quarter, while India’s business EBITDA held steady Rp52,745 crores.

In India, the company achieved its highest annual crude steel production of 19.06 million tonnes, with growth of 13% year-on-year. It also recorded the highest ever shipment of 18.27 million tonnes.

For the European business, revenue increased by 54% over last year to £8,876 million and EBITDA was £1,199 million.

Tata Steel said it stood by it’s consolidated free cash flow Rp27,185 crore despite an increase in working capital of Rp9,618 crores.

What is a stock split?

A stock split increases the number of outstanding shares by issuing more shares to current shareholders. Stock splits lower the market price of each share, but do not change the company’s market capitalization.

A company performs a stock split to make its shares more affordable if the price level is very high, which in turn will lead to increased liquidity in the stock.

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