Tata Steel hits 52-week high after announcement of Tata Motors stake sale

Tata Steel hit a fresh 52-week high of Rs 534, up 1%, extending its Monday’s 3.4% gain on BSE, after the company said that it proposes to sell 83.6 million equity shares of face value of Rs 2 each of Tata Motors to Tata Sons.

Tata Sons said it would buy 83.6 million shares or 2.85% stake in Tata Motors from Tata Steel on or after June 23. Tata Sons, currently having 28.2 per cent stake in Tata Motors, will purchase around 83.6 million shares in the company, taking its stake to 31.06 per cent.

The price at which Tata Sons will acquire the stock would not be more than 25 per cent of the estimated cost of the stock at Rs. 457.35 per share (weighted average market price for a period of 60 trading days preceding the date of issuance of the notice). On Tuesday, Tata Motors shares closed at Rs 452.3 on the BSE.

In May, a Kotak Institutional Equities note stated that a reduction in cross-holdings within the Tata Group will result in unlocking of value for listed entities, benefiting companies like Tata Power, Tata Chemicals, Tata Global and Tata Motors by allowing them to lower debt and interest expenses.