'Sell' Tata Chemicals Shares, Maintains Nirmal Bang Post Q1 Results — Check Target Price

Tata Chemicals Q1 FY26 consolidated adjusted PAT (including Tat Chemicals' share of Rallis – Unrated) at Rs 2.5 billion beat Nirmal Bang/ street estimates by 150.9%/101.4%. This was due to 27.9% beat on Ebitda and 371 bps beat on Ebitda margin aided by the beat in gross margin. Ebitda at Rs 6.49 billion, was a beat of 27.9%/18.3% vs brokerage/street estimates.

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Nirmal Bang Report

We retain Sell on Tata Chemicals Ltd., despite the 11.8% hike in our SOTP-based target price to Rs 761 - based on raised estimates in FY26- increase in the chemistry segment EV/Ebitda from 7x to 8x post roll over to Jun'27E.

The new EV/E implies P/E of 17.6x on June'27E vs median P/E of 18.5x. The global excess capacity is hurting Soda Ash prices/margins, which is likely to cap the stock after the 14% rally in three months.

Asian soda ash prices at $160-170/te are below the cash cost. This may force closures in unviable synthetic plants, especially in Europe. The management also called for closures in unviable synthetic plants in China, post the new Inner-Mongolia mining capacities.

Hence the recovery in pricing is still some time away, while benign costs may help stabilise margins.

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