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Motilal Oswal Report
Tata Chemicals Ltd.'s reported revenue of Rs 41.5 billion (our estimate:Rs 42.4 billion) in Q3 FY23, up 32% YoY. Ebitda margin expanded 490 bp YoY to 22.2% (estimate: 23.4%). Ebitda stood at Rs 9.2 billion (estimate: Rs 9.9 billion).
Adjusted profit after tax grew 32% YoY to Rs 4 billion (estimate: Rs 5.7 billion) due to lower raw material costs, low employee/other expenses as a percentage of sales and a lower effective tax.
Basic chemistry revenue/Ebit grew 42%/2.2 times YoY to Rs 34.7 billion/Rs 7.4 billion and Ebit margins expanded 730 bp YoY/150 bp QoQ to 21.4%.
Specialty products revenue was flat YoY at Rs 6.8 billion and Ebit declined by 63% YoY to Rs 150 million, with Ebit margin contracting by 380 bps YoY/690 bps QoQ to 2.2%.
Of the total expected project expansion cost of Rs 29 billion, Tata Chemical has spent Rs 20 billion as of Dec-22 (Rs 12 billion in nine months-FY23) and the remaining Rs 9 billion would be spent by March 2024.
The management expects the demand outlook for soda ash to be favorable globally, with demand coming from new solar glass lines in China and India.
The management indicated that the company has fully contracted a majority of its global capacities for CY23 at higher prices, and its benefits will be reflected from Q4 FY23 onward.
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