Tata Steel shares fall below ₹1,000 for the first time in 2022 this week – here’s why

Tata Steel shares fall below ₹1,000 for the first time in 2022 this week – here’s why
Tough days ahead for Tata Group's second most indebted companyPixabay
  • Tata Steel, one of the largest steelmakers in India, has seen a considerable decline in its share price over the last few weeks.
  • After capitalizing on steel demand from Europe and other regions since the Covid pandemic, Tata Steel now finds itself in a tough spot.
  • From hefty export taxes to weak domestic demand, Tata Steel is the second most indebted company in the Tata Group.
Tata Steel shares have been under pressure for a while now. This week, they finally fell below the ₹1,000 level for the first time in 2022. However, the decline today is not due to the company’s fundamentals or a worsening outlook.

Tata Steel’s share price declined nearly 4%, marking a decline of over 30% since peaking in April.

Tata Steel shares fall below ₹1,000 for the first time in 2022 this week – here’s why
Tata Steel share price in 2022 so farBSE / Business Insider India / Flourish

Another Tata Group company – Tata Chemicals, also witnessed a 4% fall today. The common thread between both the Tata companies is that their stock went ex-dividend today.

While Tata Steel declared a dividend of ₹51 per share, Tata Chemicals announced ₹12.5 per share dividend.

What does a stock going ex-dividend mean?


A stock going ex-dividend means that the value of the dividend is no longer included in the stock price of the company. This happens after the company declares a dividend and announces a record date. The record date is when the stock is said to be ex-dividend.

All things remaining constant, if a stock is trading at ₹100 per share, and the company declares a dividend of ₹15, then the ex-dividend price will be ₹85.

What are the analysts saying?

According to research reports, the revenue boost that Tata Steel and other steel companies got due to the post-Covid and Russia-Ukraine war disruptions – that boost is now all but over.

The reason behind it is the Indian government imposing a hefty export tax of 15% in order to cool down the steel prices in India, to tackle inflation. Shares of Tata Steel, SAIL and Jindal Steel nosedived by 16% after the news.

The iron and steel product category has witnessed a net trade surplus in the last two years – since the outbreak of COVID-19 – with the total surplus standing at $14.1 billion (approx. ₹1,07,000 crore) in 2020-21 and 2021-22.

Tata Steel shares fall below ₹1,000 for the first time in 2022 this week – here’s why
India's steel exports and imports since FY04 to FY22Business Insider India / Flourish

“The government imposition of hefty export duties on steel will lead to decline in realizations for steel companies which have been resorting to exports in the last few years,” said a report by IDBI Capital, stating that Tata Steel has been exporting 10-12% of its steel production.

Citing weakness in domestic demand, the brokerage firm downgraded Tata Steel to ‘Hold’. With a debt of ₹69,000 crore, the steelmaker will have to find better ways to ensure its revenue remains buoyant.


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