Tata Chemicals Ltd. share price target

25 July 2020 TTCH India Soda Ash business reported revenue decline of 10% to INR14.8b, primarily due to significant 9% drop in volumes (to 634kMT) and 1% decline in realizations. This was due to an oversupplied market (incl. increased imports) and decline in Soda Ash prices. Tata Chemicals North America (TCNA) revenues declined marginally by 0.3% YoY to USD480m in FY20, mainly due to 1% drop in realizations (to USD215/MT). However, this was offset by marginal 0.6% increase in sales volume (to 2.23MMT). TCNA revenue (in INR terms) inched up 1% YoY to INR34b while EBITDA increased 8.5% YoY to INR7.4b. Its Europe operations reported ~5% YoY revenue decline to GBP150m in FY20, which was mainly due to the 11% YoY fall in Soda Ash volumes (to 0.29MMT). However, this was partially offset by 1% YoY increase in Bicarbonate volumes (to 0.

Given the improving capacity utilization across plants, and strong performance of Specialty products, we expect PAT to grow at CAGR of 13.7% over FY20-22E, led by a steady growth in revenue and improved margins. We upgrade our rating to ACCUMULATE on the stock with a...

Capex programme altered until demand outlook improves The company announced capex of around | 2400 crore last year to increase capacity for soda ash, soda bicarbonate, cement and salt by FY22-23E. It was about to spend | 900 crore this fiscal, part of the announced capex, which is expected to reduce due to demand challenges post Covid-19. The company would announce the altered capex schedule post Q1FY21E. Revise our rating from REDUCE to...

In our midcap universe of 11 companies, we expect Tata Chemical, VA Tech Wabag, Emmbi Industries and Kanpur Plastipack to be the most impacted stocks given that all these have revenue contribution in excess of 30-35% from the said geographies. We have envisaged the impact of Coronavirus (Covid-19) on our midcap coverage universe based on the revenue contribution from both the US as...

We value the domestic soda ash business at 5x FY21E EV/EBITDA and overseas at 4x EV/EBITDA. We arrive at a target price of | 360, excluding investment portfolio value, providing an upside of 14% over CMP of | 316....

TCL ventured into the silica, nutraceutical business with a capex of ~| 500 crore. The same is expected to generate asset turn of 1.5-2x, RoCE of ~1520%, which we expect to improve return ratio profile for the overall group in the medium to long run. Apart from this, strong growth visibility from cathode active material and Tata Chemical's position in the entire chemistry would put the company in a favourable position in the long run. All this, in...

20 December 2019 Tata Chemicals (TTCH) has acquired the remaining 25% stake in TATA Chemicals Soda Ash Partners Holdings (TCSAP) from the Andover Group, Inc. for USD195m (thus, valuing 100% stake at USD780m) through its wholly-owned subsidiary, Valley Holdings Inc. With this acquisition, TTCH has increased its ownership in TCSAP to 100%, which is a move to simplify enterprise architecture. For FY19, TCSAP had a turnover of USD466m and EBITDA of USD101m. TTCH currently operates a capacity of 2.5MMT of natural soda ash in North America. The worlds largest deposits of trona used for manufacturing natural soda ash are found in the Green River Basin of Wyoming, North America. TTCH acquired the balance 25% stake in TCSAP for USD195m; of this, USD175m will be funded through debt and balance will be funded internally.

At the time of the announcement, the deal valued the Consumer business at ~18x FY19 EBITDA, implying an EV of INR57.6b (INR226/share). As a result, the value/share of the consumer business being transferred to TGBL stands at INR342/share. Against this backdrop, we attempt to analyze the valuation at which the residual business is available. We back calculated the valuations at which the residual business is available factoring in the current market prices. According to our calculations, the enterprise value post demerger adjusts for the value of Rallis, quoted investments and value of TGBLs shares to be received by the shareholders of TTCH. We also adjusted EBITDA post the demerger of the Consumer business and Rallis (we have excluded Rallis EBITDA as we have done the same in our EV calculation). Thus, the residual business is available at 4.4x/3.7x FY20/21E EV/EBITDA.

31 October 2019 higher depreciation and lower other income. PAT was up 10% 1HFY20, revenue/EBITDA/PAT were up 5%/12%/7% YoY. Chemistry EBIT margin expanded strongly by 670bp YoY to 29.8% in the quarter. However, Consumer margin shrank 450bp YoY due to one-time demerger-related cost and higher ad spends. In 9% YoY, led by volume growth of 3% and the balance through realization improvement. EBITDA/MT increased 2x YoY to USD52 in the quarter on the back of improved efficiencies, lower input cost and reduced fixed cost. sales declined 5% YoY due to lower trading volumes, but EBITDA was up 36% YoY led by lower manufacturing cost (RM and energy). EBITDA/MT increased 48% YoY to GBP49. In the EBITDA/MT improved 6% YoY to USD47 (-7% QoQ) with realizations remaining flat YoY (-1% QoQ) and sales volume growth of 1% YoY. We largely maintain our estimates of revenue/EBITDA/PAT CAGR of 9%/15%/11% over FY19-21.

Q1FY20 revenue rose 5.6% YoY Rs. 2,897cr, primarily led by revenue growth in Consumer products (+13.0% to Rs. 495cr) and Specialty products segment (+8.9% to Rs. 634cr). Basic chemistry products revenue witnessed muted growth of 1.3 % YoY to Rs. 1,946, impacted by lower production of soda ash in Mithapur. By geography, strong performance in US (+10.5% YoY to Rs. 845cr), Africa (+32.3% to Rs. 123cr) and India business (+4.2% to Rs. 1,031cr) offsets weak performance in UK region (-10.8% to Rs. 307cr). EBITDA margins surged 256bps YoY to 20.4% primarily with improved margins for BCP with better realizations for Soda ash and lower costs. The company...

Largely in-line revenue/EBITDA: Revenue grew 6% YoY to INR29b (our estimate: INR31b) in 1QFY20. EBITDA rose 21% YoY to INR5.9b (our estimate: INR5.6b), with the margin expanding 260bp YoY to 20.4% (our estimate: 18.1%). On a like-to-like basis, EBITDA was up 17% YoY to INR5.7b...

The board of TATA Chemicals (TTCH) has approved the demerger of its consumer products business and the transfer of the same to TATA Global Beverages (TGBL) in an all-equity transaction. As part of the transaction, TTCH would transfer the salt, spices, protein foods and certain other food & products businesses. However, the salt manufacturing facility, basic chemistry products and specialty products businesses will remain with the company. Existing shareholders of TTCH will receive 1.14 shares of TGBL for every 1 share held in TTCH.

4 May 2019 reported in-line, however adj. PAT came in higher than expected due to deferred tax benefit of INR462m which led to significantly lower than Revenue grew 10% to INR112.9b, with margin contraction of 280bp to 18.5%. Adj. PAT was down 10.8% YoY to INR10.9b. EBITDA/MT increased 43% YoY to USD53.3 in North America (realization up 5% YoY to USD226.3/MT) and 46% YoY to USD56.1/MT in Africa (realization up 3% YoY to USD255.3/MT). India business delivered 4% YoY growth in soda ash volumes and also improved realization, but profitability was marred by higher power and plant fixed cost.

Tata Chemicals' consolidated revenue grew 8.0% yoy to Rs27.6bn (Emkay est: Rs28.1bn) and EBITDA grew 3.6% yoy to Rs5.3bn (Emkay est: Rs5.4bn). EBITDA margin declined by 82bps yoy to 19.2% (Emkay est: 19.3%). Consolidated soda-ash revenue increased 13.5% yoy to Rs22.1bn on better realizations across geographies. Total soda-ash volume declined 4% yoy due to lower volume at TCNA and the discontinuation of the trading business in Europe (from Q1FY19). second phase of 130K MTPA will come in 3-4 years. The 400K MTPA salt capacity will come in 3 steps in 3-4 years. Mgmt expects soda-ash prices to remain firm globally....

We recently met the CFO of Tata Chemicals John Mulhall. During the meeting, we got a sense of the business dynamics of Soda Ash, Sodium bicarb and Consumer business. Tata Chemical (TCL) is a predominant player in the soda ash industry with a combined capacity of ~4.2 MTPA across different parts like North America, Africa, Europe and India. Moreover, the company also has a soda bicarb capacity of 0.1 MTPA each in India and Europe. Going ahead, the strategy would be increasing soda ash plant utilisation in the Africa region along with improving sales mix of soda bicarb...

Tata Chemicals Ltd Q2FY19 results Comment Revenue increased by 2.47% to Rs. 1013.61 Cr in Q2FY19 when compared to the previous quarter. Also, it rose by 22.69% when compared with Q2FY18.

27 September 2018 TTCH commenced its consumer business in 2011 pulses was the sole product platform then and sold under the brand name of i-Shakti. The brand Tata Sampann was launched in 2015 with a view to include all food/consumer products under a single umbrella. Tata Sampann now encompasses five product platforms (spices, pulses, besan, mixes, and chutneys) in multiple variants. TTCHs pulses, besan and spices products available in general trade are already leveraging Tata Salts robust distribution network. According to the company, most of its products in general trade are already reaching close to an optimum number of touch points. pulses, besan and spices) are now available at 40% of Tata Salts touch points. In line with this, the company has scaled up pulses, is in the process of scaling up besan and is coming up with value-added products like mixes and chutneys.

TCL's revenue grew by 13% YoY in Q1FY19 led by strong growth in consumer products segment (up 33% YoY) on the back of higher volumes from Tata Salt. However, EBITDA rose 8% YoY leading to margin contraction of 87bps in Q1FY19 impacted by weak margin in the US and Africa businesses. While we expect EBITDA margin to decline slightly in FY19E due to rising raw material and crude oil prices, it is expected to expand by 40bps YoY to 21.4% in FY20E led by strong volume...

Revenue grew by 8.38% to Rs. 2769.12 Cr in Q1FY19 when compared to the previous quarter. Tata Chemicals Ltd Q1FY19 results Comment