Shares of this Tata Group company zoomed 17 percent today after an announcement made by the company pertaining to the conversion of shares. In the last one-month period, the shares of the company have gained more than 40 percent from Rs 300 to the current price level.
With a market capitalization of Rs 21,463 crores, the stocks of Tata Motors-DVR Limited currently trade at Rs 422. The scrip witnessed an intra-day high of Rs 437, also marked as the company’s new 52-week high price, indicating a gain of around 17 percent as compared to the previous closing levels of Rs 374.40 apiece.
The surge in stock prices today is observed after the company, in a regulatory filing with the BSE dated 25th July 2023, announced a scheme of arrangement pertaining to the conversion of shares.
The Board of Tata Motors Limited, in a meeting that took place on 25th July 2023, approved the reduction of capital of the company by way of cancellation of the whole set of class ‘A’ ordinary shares and allotment of ordinary shares which would rank at par with the existing ordinary shares of the company. The above-mentioned transaction is subject to shareholder approvals as well as some other regulatory requirements.
Once the scheme gets effective, the company will issue 7 fully paid-up new ordinary shares with a Face Value of Rs 2 each for every 10 ‘A’ ordinary shares of Face Value of Rs 2 each as a consideration for the reduction and cancellation of the latter class of shares.
The consideration exhibits a 23 percent premium to the closing prices of ‘A’ ordinary shares on 24th July 2023, and, a 30 percent discount to the closing prices of ordinary shares as on 24th July 2023. The transaction will result in a 4.2 percent reduction in the number of outstanding equity shares of Tata Motors.
Having a quick walkthrough of the consolidated financials, the basic parameters such as the operating revenues and after-tax profits have shown an increase.
The operating revenues moved from Rs 2,78,453 crores during FY21-22 to Rs 3,45,966 crores in FY22-23, and, the after-tax profits transitioned from losses of Rs 11,234 crores to profits of Rs 2,353 crores keeping the timeframe the same.
Tata Motors Limited is a company based in India that is engaged in the business of manufacturing automobiles. The company, broadly, has two business segments, i.e., the “Automotive” segment dealing in commercial vehicles, passenger vehicles, Jaguar Land Rover (JLR), etc, and other segments covering consultancy and insurance broking services.
Written by Amit Madnani
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