The shares of this chemical-based company fell by 3.2 percent after the company saw a drastic fall in its net profit by 46 percent in Q2 and also Morgan Stanley downgraded by looking at second-quarter performance.
With a market capitalization of Rs 26,850.04 crore, the shares of Tata Chemicals Ltd were trading at Rs 1,053.95 per share, increasing around 2.01 percent as compared to the previous closing price of Rs 1,073.70 apiece.
Reason for fall:-
The shares of the company have seen bearish movement after Tata Chemicals Ltd revenue zoomed by 0.02 percent on year on year basis from Rs 3,998 crore in Q2FY24 to Rs 3,999 crore in Q2FY25, however in Quarter on a Quarter basis revenue increased by 5.5 percent from Rs 3,789 crore in Q1FY25 to Rs 3,999 crore Q2Y25.
Moreover, net profit plummeted drastically by 46 percent on a yearly basis from Rs 495 crore in Q2FY24 to Rs 267 crore in Q2FY25, meanwhile on a quarter-on-quarter basis net profit jumped by 40 percent from Rs 140 crore in Q1FY25 to Rs 267 crore in Q2FY25.
Brokerage Recommendations:-
Morgan Stanley, one of the well-known brokerages globally, gave a ‘sell’ call on the chemical stock with a target price of Rs 880 apiece, indicating a potential downside of 16 percent from Friday’s price of Rs 1,053.95 per share.
Operational Highlights:-
Demand remains stable across end-user industries, with strength in detergent, flat glass, container glass, and solar glass. Seasonal detergent demand moderation is expected during the monsoon, with recovery post-winter. North America is flat, Europe muted, while China sees strong solar glass and lithium carbonate demand.
Market Dynamic & Outlook:-
India’s imports rose from January to May but have slowed due to higher freight rates from Middle East tensions. U.S. soda ash production normalized after operational issues were resolved, while China saw slight production cuts due to quality improvement efforts in Inner Mongolia.
Soda ash demand remains strong, with the company fully sold out and expecting stable market conditions into Q3. Management is cautious about the supply-demand balance, especially in Europe, and is closely monitoring Chinese market dynamics for potential signs of softness.
Capacity Expansion:-
The company commissioned 230,000 tons of soda ash at Mithapur, with capacity ramp-up expected in the coming months. Upcoming CAPEX includes a 70,000-ton bicarbonate capacity and new pharmaceutical salt production, both set to come online in the UK during the second half of the year.
Prising & Margin:-
U.S. domestic market operates on annual contracts, with slight export price increases in Southeast Asia expected to boost future margins. UK margins softened due to lower energy sales from high renewable generation. Kenya’s margins are impacted by higher shipping and transportation costs but are expected to normalize.
Company Snapshot:-
Tata Chemicals Limited is an India-based sustainable chemistry solutions company. The Company’s segments include Basic Chemistry Products and Specialty Products. Basic Chemistry Products segment comprises inorganic chemicals, such as soda ash, salt, and sodium bicarbonate.
Written by:- Abhishek Singh
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