The shares of this chemical-based company gained 1 percent in the morning trading session after the company’s subsidiary received approval for a capital investment of Rs 655 crore to build a sodium bicarbonate plant in the UK.
With a market capitalization of Rs 26,908.63 crore, the shares of Tata Chemical Ltd were trading at Rs 1,056.25 per share, increasing around 1.36 percent as compared to the previous closing price of Rs 1,071.60 apiece.
Reason For Rise:-
According to the company filing, the board of directors of Tata Chemicals Europe Limited (TCEL), a wholly-owned subsidiary of the company, has considered and approved the proposal of capital investment of £60 million (~Rs. 655 crore) to build a 1,80,000 tons per annum pharmaceutical grade sodium bicarbonate plant in Northwich, United Kingdom.
This new plant will triple TCEL’s pharmaceutical-grade sodium bicarbonate production capacity in the UK. Further, as part of the restructuring operations to facilitate this investment, the Board of TCEL has approved the proposal to cease chemical production at its loss-making Lostock plant by the end of January 2025.
Financial Performance:-
Recently, Tata Chemicals Ltd’s 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 in 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.
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 the 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 is 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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