With a market capitalization of ₹ 24,685 Crores, Tata Chemicals is a mid-cap stock. Its shares were trading at ₹ 975 levels on Friday’s early trades.
The company operates through two business segments: basic chemistry products and speciality products. Its products are used in sectors like glass, detergent, pharmaceutical, biscuit production, bakeries and so on.
On a consolidated basis, the company clocked revenue growth of 26.60% at ₹ 4,407 crores in the March quarter (Q4FY23), against ₹ 3481 crores in the corresponding quarter of the previous year (Q4FY22). Its quarterly net profit increased by a massive 62.82% to ₹ 692 crores in Q4FY23, as compared to ₹ 425 crores in Q4FY22.
For the entire year (FY23), it reported consolidated revenue from operations of ₹ 16,789.00 crores, indicating an increase of 33.01% against ₹ 12,622.00 crores reported in the previous financial year (FY22).
In fact, the company reported an impressive 73.24% increase in its consolidated net profit at ₹ 2434 crores in FY23, as compared to ₹ 1405 crores in FY22.
The Tata Chemicals company’s board has recommended a dividend of ₹ 17.50 per share i.e. 175% for the financial year 2022-23 subject to the approval of the shareholders.
The Life Insurance Corporation of India holds 2,19,57,603 shares or an 8.62% stake in the company.
According to a recent research report by ICICI Direct, the brokerage has a ‘buy’ rating on the company’s shares with a target price of ₹ 1130. This translates to an upside of 15.90% as compared to its share price of ₹ 975.
The rationale behind the target is a tighter global Soda Ash supply scenario against sustained demand and upbeat management commentary regarding demand (despite impending new global capacities).
It said that the key triggers for future price performance were strong demand for soda ash from the container glass segment along with new applications like solar glass and lithium carbonate, sustainability of soda ash prices or moderation on expected lines and revival in export demand for North America unit, reopening of China’s real estate demand and few glasses line channels to sustain group performance.
Tata Chemicals has a return on equity of 12.30% and an ideal debt-to-equity ratio of 0.32. Its shares were trading at a price-to-earnings ratio of 10.65, which is lower than
the industry average of 15.53, indicating that the stock might be undervalued as compared to its peers. It has a dividend yield of 1.81%.
The company’s promoters hold a 37.98% stake in it, followed by retail investors with 27.66%, foreign institutions with 14.59% Mutual Funds with 10.77% and other domestic institutions (including LIC) with 9.00%.
Written By Simran Bafna
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