Tata Chemicals giving opportunity to enter for long term

20 Apr 2023

Tata Chemicals Limited is engaged in the business of manufacturing and selling a variety of chemicals and agricultural products. The firm has three reportable segments – Inorganic Chemicals, Agri Inputs, and Others. The majority of company’s revenue is coming from domestic operations itself.

Tata Chemicals is the world’s third-largest producer of soda ash with a global capacity of 4 million tonnes per annum with manufacturing operations spread across India, US, UK, and Kenya.

The sharp fall in stock prices mentioned above is observed after there has been a buzz around soda ash prices. There has been a fall in soda ash prices in China since mid-March and the market, lately, reacts to unexpected news of substantial capacity addition in Inner Mongolia from May this year.

Having a quick glance at the financials of the company, the revenues and PAT figures have decreased in the recent quarters with revenues going down from Rs 4,240 crores in Q2 to Rs 4,150 crores in Q3. Net profits too went down from Rs 640 crores in Q2 to Rs 520 crores in Q3.

On the contrary, the profitability ratios have shown some improvement with ROE moving from 3.02 percent in FY20-21 to 7.22 percent in FY21-22. Moreover, the ROCE numbers shifted from 4.72 percent during FY20-21 to 7.58 percent in FY21-22.

As per the data available for the quarter ending December 2022, promoters hold a 37.98 percent stake in the company. FIIs, on the other hand, reduced their stake with the recent movement being 14.92 percent in Q2 to 14.43 percent in Q3.


Market Cap
₹ 24,016 Cr.
Current Price
₹ 943
High / Low
₹ 1,215 / 773
Stock P/E
11.6
Book Value
₹ 753
Dividend Yield
1.33 %
ROCE
8.40 %
ROE
7.58 %
Face Value
₹ 10.0
Debt
₹ 6,375 Cr.
EPS
₹ 80.3
PEG Ratio
2.64
Promoter holding
38.0 %
Intrinsic Value
₹ 973
Pledged percentage
0.00 %
EVEBITDA
7.94


PROS

Company is expected to give good quarter
Company has been maintaining a healthy dividend payout of 42.9%

CONS

The company has delivered a poor sales growth of 4.06% over past five years.
Working capital days have increased from 18.3 days to 63.0 days


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