Tata Chemicals Ltd. share price target

Rising spot prices and demand recovery should aid company performance, with margins set to improve further. We remain positive on the stock and upgrade our rating to BUY with a revised target price...

Under basic chemical, TCL offers soda ash, soda bicarbonate, cement, salt, marine chemicals and crushed refined soda, while speciality chemical consists solution towards agro chemical through Rallis and other specialty...

With Company's domestic operations returning to normalcy, we expect realisations to improve from hereon. At current price levels however, we see limited upside to the stock and downgrade our rating to HOLD with a revised target price of Rs. 735 based on 17x FY23E adj. EPS. Higher volumes aid topline; Margins slip on lower realisations Q4FY21 revenue rose 10.9% YoY to Rs. 2,636cr, aided by growth across all segments. Revenue from sales of Basic chemistry products (BCP) went up 5.6% YoY to Rs. 2,111cr, while that of Specialty products rose 37.6% YoY to Rs. 520cr. Agro science...

Tata Chemicals (TTCH)'s consolidated EBITDA came in below our estimates largely dragged down by North America (NA) and Europe due to the absence of operating leverage and one-time costs. In the last six months, TTCH has rallied ~126%, whereas the Nifty has appreciated by ~20%. This outperformance is largely attributable to its plans to enter into the Energy Science biz. (EV cell manufacturing) GOI has announced the PLI incentive for the EV Battery business, but plans are yet to be finalized (highlighted by the mgmt. during the 4QFY21 call)....

Demand push should aid volume growth in the coming months. Sales realisations are expected to rise from current levels in the coming months. We reiterate our ACCUMULATE rating on the stock with a rolled forward target price of Rs. 552 based on 15x FY23E adj. EPS. Topline flat sequentially, but PAT doubles on improved margins Q3FY21 consolidated revenue stood at Rs. 2,606cr (-0.1% QoQ, -0.7% YoY) owing to lower sales realisations despite a positive demand uptick seen in products such as soda ash, salt, cement, etc. Among its abroad operations, UK and Africa businesses recorded...

TTCH's consolidated EBITDA was ahead of our estimate, even after adjusting for one-time insurance gain. EBITDA performance was above our estimates across geographies (barring Europe). Performance in North America was hit by a fall in exports and pressure on realizations. Its India operations clocked higher volumes, but margin was impacted due to pressure on realization. Factoring in 3Q performance, we have raised our FY21E earnings estimate by 20% and by 12% each for FY22E/FY23E on the back of an expansion at the Mithapur plant. Maintain Buy with a SoTP-based TP of INR547/share....

North America (NA) mainly caters to Latin America and South East Asia in terms of exports market. The NA region recorded export sales volume fall of 33% YoY to 197,000 MT. The management believes that subdued exports sales volumes were partly was on account of higher Covid-19 cases in Brazil, which impacted production value chain across end user industries and thereby pressurised demand for soda ash. Further, lower construction activity in southern Asian countries along with increase in supply from China depressed realisations for soda ash. Hence, this impacted the performance...

Tata Chemicals' (TTCH) operating performance was muted across geographies (barring Europe). This was primarily led by North America and India, where EBITDA declined 48% and 40% respectively. The Soda Ash segment's performance was impacted by reduction in demand from the end user industry (largely for flat and container glass). Factoring in the miss to our estimates (due to one-time cost) and weak end-user industry demand scenario, we cut our EBITDA estimates by 6% for FY21 while...

Flat glass demand likely to improve by end of this fiscal Due to lockdown, there was a slowdown in construction activity primarily due to labour/demand related issues. Further, there was a slowdown in auto activity also, impacting demand for flat glass and, thereby, soda ash consumption. Flat glass is estimated to comprise ~50% of soda ash demand. The management believes flat glass demand would improve by end of this fiscal and can support better demand growth from next year. Further, majority of the new capacity from China, North America has been...

This was primarily led by North America (NA), wherein EBITDA declined 81% YoY on lower volume offtake. The Soda Ash segments performance was impacted by a reduction in demand from the end user industry (largely for flat and container glass). Factoring the miss in our estimates and a weak end user industry demand scenario, we cut our EBITDA estimates by 14%/6% for FY21/FY22 and arrive at an SOTP-based TP of INR368. Maintain was primarily on account of the absence of operating leverage and higher RM cost, offset by lower freight and power costs. EBITDA de-grew 30% YoY INR1,824m); decline in adj. This was on account of a 28%/22% drop in soda ash/bicarb volumes and lower realization, offset by 26% volume growth in salt. revenue declined 27% YoY due to a 28% drop in volumes (exports / domestic volumes declined 45% / 13% YoY).