This Tata Group stock engaged in manufacturing and selling a wide range of chemicals, including soda ash, bicarbonates, and specialty chemicals, across global markets. The stock is currently trading below its book value, raising questions for investors. This could indicate an undervaluation, potentially offering a buying opportunity.
Stock Price Movement:
With a market capitalization of Rs. 20,696.40 crore, the shares of Tata Chemicals Limited closed at Rs. 812.40 per equity share, down nearly 4.34 percent from its previous day’s close price of Rs. 849.30. The stock is currently trading at 34.73 percent below its 52-week high of Rs. 1,244.70.
Company Overview:
Tata Chemicals Limited was established in 1939 and is a global company headquartered in Mumbai. It specializes in basic and specialty chemicals, crop protection, and sustainable solutions. The company engages in manufacturing soda ash, sodium bicarbonate, salt, and agrochemicals, serving industries like glass, detergents, agriculture, and nutrition.
Book Value:
Tata Chemicals Limited is currently trading at Rs. 812 per share, while its book value stands at Rs. 871. This indicates that the stock is trading below its book value, which could suggest potential for future growth or value based on the company’s assets.
Future Outlook:
Tata Chemicals Limited is optimistic about growth in India and Asia, despite challenges in Western Europe and the U.S. They plan to maintain market share in the UK by importing soda ash from the U.S. while continuing bicarbonate and salt production. Improved market conditions are expected as pricing pressures ease.
Strategic Initiatives:
Tata Chemicals Limited is focusing on increasing sales by engaging with customers and reducing costs. The company plans to adjust its investment in new projects based on market conditions and will expand its production capacity in phases. Expansions in the U.S. and Kenya will be introduced step-by-step to manage cash flow effectively.
Domestic Production Facilities:
Tata Chemicals operates several facilities across India with significant production capacities. In Gujarat, the company produces soda ash with a capacity of 1,091,000 MTPA, bicarbonate at 290,000 MTPA, and salt at 1,600,000 MTPA.
Additionally, the Andhra Pradesh facility has a capacity of 5,000 MTPA for prebiotics, and the Tamil Nadu facility produces specialty silica with a capacity of 10,800 MTPA. Rallis India Limited focuses on crop care, crop protection, and seeds in Maharashtra and Gujarat.
International Facilities:
Tata Chemicals also has international facilities in the USA, UK, and Kenya. In the USA, the company’s Wyoming facility has a capacity of 2,540,000 MTPA for soda ash.
In the UK, the plant in Lostock, Winnington, and Middlewich produces soda ash (400,000 MTPA), bicarbonate (130,000 MTPA), and salt (430,000 MTPA), with pharma salt at 70,000 MTPA. In Kenya, the Magadi facility focuses on soda ash with a capacity of 350,000 MTPA.
Recent quarter results and ratios:
Tata Chemicals Limited’s revenue has decreased from Rs. 3,730 crore in Q3 FY24 to Rs. 3,590 crore in Q3 FY25, which is down by 3.75 percent. The net profit of the company has turned negative, from Rs. 194 crore in Q3 FY24 to Rs. -21 crore in Q3 FY25.
Tata Chemicals Limited’s revenue has grown at a CAGR of 8.33 percent over the last five years. In terms of return ratios, the company’s ROCE and ROE should be 7.81 percent and 2.32 percent, respectively. Tata Chemicals Limited’s debt-to-equity ratio is 0.29x.
Written By-Nikhil Naik
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