Tata Steel, Tata Elxsi: 2 Tata group shares turn ex-dividend; stocks mixed

Shares of Tata Steel and Tata Elxsi turned ex-date for dividend on Thursday. Tata Elxsi had declared a dividend of Rs 60.60 per share while Tata Steel had announced dividend at Rs 3.60 per share. Tata Steel will pay the actual dividend on July 10 while Tata Elxsi’s dividend payment will be made on August 3.

At 9.52 am, shares of Tata Steel were trading 1.45 per cent higher at Rs 111.90 on BSE. Shares of Tata Elxsi were down 0.71 per cent at Rs 7,738.

In the case of Tata Steel, domestic steel prices, which move in tandem with international steel prices, have corrected over the last few weeks. But the steel demand is expected to improve before the onset of the monsoon season.

"The UK operation continues to be a drag, with its assets nearing the end of useful lives, and would keep the group performance in check. Tata Steel relies heavily (75-78 per cent) on domestic merchants or imports for its coal requirements and any sharp increase in its prices could adversely impact its margins. While Tata Steel is well placed and, the stock trades at 5.8x times FY24E EV/Ebitda. We reiterate our Neutral rating on the stock with a SoTP-based TP of Rs 110," it said.

Motilal Oswal said the ongoing amalgamation process of seven of its subsidiaries and one associate company into Tata Steel is expected to be concluded by the end of FY24. "The amalgamation will enable Tata Steel to achieve higher synergies, drive significant cost savings, undertake focused growth capex, increase market presence across product lines, and consolidate market share under a single unified brand. The amalgamated entity will also incur lower royalty payments and increase liquidity for the existing shareholders," it said.

An average target of Rs 6,213 on the stock, as per Trendlyne, suggests a 20 per cent potential downside for the stock. Recently, Tata Elxsi was in news after it partnered with the Indian Space Research Organization (ISRO) for the upcoming Gaganyaan Mission. Tata Elxsi has designed and developed the crew module recovery models (CMRM) for the recovery team training of the space mission.

Tata Steel's price target at Rs 126, on the other hand, suggests 13 per cent potential upside.

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