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Tata Steel shares rise 4% as board approves merger of seven metal firms

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Shares of Tata Steel gained 4 per cent in early trade today  after board of the firm cleared the amalgamation of seven of its subsidiaries with the parent company. Tata Steel stock hit an intraday high of Rs 107.90 today against the previous close of Rs 103.65 on BSE. Earlier, it opened 2.46 per cent higher at Rs 106.20. Market cap of the firm rose to Rs 1.28 lakh crore today.

Total 21.94 lakh shares of Tata Steel changed hands amounting to a turnover of Rs 23.35 crore on BSE. The stock has gained after two days of fall.

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The stock is trading higher than 5 day, 50 day and 100 day moving averages but lower than 20 day and 200 day moving averages. However, shares of Tata Steel have lost 20.27 per cent in a year and declined 5.35 per cent in 2022. The stock has lost 2.19 per cent in a month.

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The board of Tata Steel has cleared the amalgamation of Tata Steel Long Products, Tata Metaliks, The Tinplate Company of India, TRF, Indian Steel & Wire Products, Tata Steel Mining and S&T  Mining with the parent company. The decision was taken at a board meeting of the company held on Thursday, an exchange filing said.

Explaining the rationale behind the merger scheme, Tata Steel said the resources of the merged entities can be pooled to unlock the opportunity for creating shareholder value. Besides citing other synergies, it also said the mergers will result in utilisation of each other’s facilities in a more efficient manner. Marketing and distribution network of both entities can be collaborated, it said.

“In line with group level 5S strategy – simplification, synergy, scale, sustainability, and speed – proposed Scheme will simplify group holding structure, improve agility to enable quicker decision making, eliminate administrative duplications, consequently reducing administrative costs of maintaining separate entities,” Tata Steel said.

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