Hi, today morning an announcement came that the Tata group will be merging all its Metal companies into Tata Steel. The companies being merged include :-
Tinplate : Shareholders will get 33 shares of Tata Steel for 10 shares of the company.
Tata Metaliks : Shareholders will get 79 shares of Tata Steel for 10 shares of the company.
Tata Steel long : Shareholders will get 67 shares of Tata Steel for 10 shares of the company.
TRF : Shareholders will get 17 shares of Tata Steel for 10 share of the company.
Have pasted the original announcement.
I don’t think the dates have been announced yet.
Possibilities of merger arbitrage exist. If the share price of one of the smaller cos goes too low, and if you are willing to short 1 lot of Tata Steel and buy the equivalent (post merger) amount of the smaller co, then ideally it should work out. As with other risk arbitrage plays, the real risk is if the merger doesn’t go through. The reverse trade doesn’t work because you can’t trade FnO in any of the smaller cos, so there’s no way to short those.
Hi all, I hope this thread is also related to tata steel. 4.5% is a nice dividend yield. considering the nature of the company. steel being in upcycle.
What I like about the company?
Dividend yield 4.5% is attractive.
Synergy with other valued added steel products is just amazing.
Raw materials 100% iron ore is sourced inhouse. only coal 50% requirements are imported. (from annual reports)
Being associated with the tata family.
What are my expectations?
I am not expecting the stock to be a huge multi-bagger. I expect the stock to be a nice cushion against inflation with the regular increasing dividend flow.
My Questions to fellow trackers of this company,
Are my expectations good? your comments.
As per annual reports I am to understand that all their iron ore requirements are satisfied in-house. in this case how long they will be able to dig up the iron ore? how much is left? how difficult is it to acquire new pits?
since we are in a steel upcycle. how much in percentage it has effects on profits in the down cycle.
Any point you share will be helpful. thanks in advance!
Tata Steel will be the India’s first licensed manufacturer for Corten steel (Weathering steel). Corten steel eliminates the need for painting and forms a stable rust-like appearance after several years’ exposure to weather. It is widely used in construction of shipping containers and large structural work such as bridges.
There is a sureshot/concrete cost savings on iron ore royalty payments of about 500 crores (source: 5paisa), which is ~1.5% of the operating profit of TATASTEEL in FYe21 (not comparing to FYe22 because it seems to have been an exceptionally good year). There might be other synergies and cost savings but in my opinion but those are rather wishy-washy and may or may not pan out.
Disclosure: Was invested in TATASTEEL (~2% of my portfolio) and have gone for the merger arbitrage (by selling my TATASTEEL shares and buying TINPLATE/TATASTLLP).
I see daily newspaper ads on the merger and asking shareholders attention
My point: I feel that cost saving will be the key and holding structure is cleared
For employees, transfers and Departmental issues will be solved.
Withdrawal of TRF’s merger with Tata Steel has triggered quiet a rally in TRF. I tend to agree with the upmove
My simple thesis on this name:
Withdrawal of merger is a clear indication that the worst is behind - both financially and operationally
A CHP (Coal Handling Plat) manufacturer, it is likely to be a beneficiary of growing thermal power need in the country. TRF is a vendor to BHEL who has been winning significant quantum of thermal power orders. Those should start to reflect in its vendor books as well.
At 14x trailing PER, it is one of the cheapest stock among peer set.
Finally, despite recent run-up, market cap is just INR 530cr. For a Tata Company, that should indicate signicant upside potential.
A silly doubt - Some one please clarify. There was a stock merger of Tata steel BSL to Tata Steel in the ratio 15:1 , I held 2000nos of Tata Steel BSL , hence 133.33 nos of Tata steel must be received , however i received 133 nos , what will happen to the fraction 0.33nos?
You might have got an allotment letter/email OR might get one soon about this fractional entitlement.
Usually fractional entitlement shares are clubbed together under a custodian, sold off, and the proceeds distributed among the shareholders based on their fractional entitlement. this might take upto a few months, but contact the company RTA to get exact timelines, etc.
This information is little off topic however, just wanted to share my understanding and things that is happening with TATA Steel.
After Tata Steel UK initiated legal action against an employee’s union after their announcement on early shutdown of its operations at the Port Talbot facility. This all started when Tata steel planned to shut down its loss-making business by decommissioning two blast furnaces and replace it with Electric Arc furnace project. The Company had also sought support from the UK Government and came to an agreement to invest £500 million.
Now what’s the issue?
Around 2800 jobs will be lost in closure of the blast furnaces. Also, the long-term Steel making sustainability would come to a pause.
Hence, Employee union’s secretary Sharon Graham stated that “We call on the real decision makers in Mumbai to take hold of this dispute, sit down, negotiate, and realise that the investment secured will be good for the company and workers.”
What the Company is doing?
The Company has urged the Union to withdraw its strike that is going to start from July 8, 2024 and consider its proposal which includes “generous” employee support packages, training, and skills development.
In the coming days, if the Company is unable to continue to safely and stably operate the assets through the period of strike action, they will have to pause or stop heavy-end operations (including both blast furnaces) on the Port Talbot site.
The Company has emphasized that shutting down operations would be extremely costly and disruptive throughout the supply chain.
They also stated that safety of people on the site will be their priority.
To Conclude, Tata Steel being one of the largest steel manufacturing Company around the globe, these disruptions would not hamper the long-term goals of the Company. However, if the operations are being paused or stopped for a longer duration it would badly affect the company’s topline growth in the near term.
