Shares of Tata Steel rose over 1 percent in early trade on the BSE even as broader markets fell over 1.5% on Monday. Investors cheered after the company's board announced it is considering a stock split and a dividend.
An average of 30 analysts polled by MintGenie have a 'strong buy' rating on the stock.
The company said it will consider a stock split proposal at the board meeting to be held on May 3, as per the regulatory filing. The company says the ratio will be decided at the board meeting.
In the past one year, the stock of Tata Steel has surged 49 per cent as compared to a 22 per cent rise in the S&P BSE Sensex.
Tata Steel is one of the world's largest steel companies with a global annual crude steel production capacity of 34 million tonnes per annum (MnTPA). The company is a diversified steel producer with major operations in India, Europe and South-East Asia.
The steelmaker has benefited enormously from the sharp increase in the prices of steel over the past two years. Regional steel prices have increased recently due to the escalated Russia-Ukraine conflict. Indian domestic HRC prices have increased by 13% MoM in India.
According to the research reports, Tata steel's net debt has decreased from a height of ₹1 Lc Cr in FY20 to ₹62,869 Cr as of Dec'21. Group EBITDA/tonne peaked at ₹24,112/tonne in Q2FY22, driven by strong steel prices.
The company's balance sheet is in good shape because of strong steel prices, disciplined Capex outflow, and working capital management.
In the latest quarter number, Tata Steel reported a 139% jump in consolidated net profit of ₹9,598 crore for the quarter ending December 31, 2021.
Consolidated revenue surged 45% to ₹60,783 crore as against ₹41,935 crore a year ago.
Consolidated free cash flow was ₹6,338 crore in 3QFY22 despite an increase in working capital of ₹2,045 crore.
EBIDTA growth stands at 64% and Profit after Tax growth stood at 139%.
The company’s board of directors will also consider dividend recommendations for the financial year ended March 31, 2022.