Tata Chemicals Expects Margins To Improve In Q3-Q4 Led By Volume Growth

Tata Chemicals expects some margin fluctuations through FY26, with a softer Q2 due to the monsoon season impacting construction work and detergent demand in India and Southeast Asia, the company's MD and CEO, R Mukundan, said on Monday.

Speaking to NDTV Profit, Mukundan said that margins are expected to rebound in Q3 and Q4 as volumes recover.

“Let me just say that Q2 tends to be a softer quarter for us compared to Q1. This is mainly because during the monsoon season, construction activity slows down and demand in the detergent sector also dips. Barring that, I think Q3 and Q4 will see an uptick and return to normal levels. By the end of Q3, we also expect additional storage capacity to become operational at Mitapur (Gujarat),” he said.

The company also expects its UK pharma plant, commissioned in Q1, to start contributing in Q2. Additionally, by December-end, Tata Chemicals expects some debottlenecking to be completed in India, which should boost volumes, according to Mukundan.

“So, yes, there will be a volume impact, and cost efficiencies will continue to play out. In terms of market volume or dispatches, we anticipate a moving number, with a slight dip due to the monsoon, followed by a pickup in Q3 and Q4,” he noted.

In Q1FY26, the speciality chemicals arm of the Tata Group reported lower volumes and revenue, largely due to the planned closure of a UK unit as part of a broader restructuring strategy. With this, Mukundan explained that the company expects to realise Rs 600 crore in benefits this year.

“There will be something like a one-third, one-third, one-third benefit coming this year….Rs 200 crore coming from the cessation of operations in the UK, Rs 200 crore from the new capacity additions in India, and another Rs 200 crore coming in from cost-out….I think all three are playing out….As we speak, the only lever we need to work on is the working capital lever, which we need to sort of rationalise,” he explained.

The company has targeted to reduce debt by Rs 500 to Rs 600 crore this fiscal, with an overall target of Rs 1,500 crore over the next two years. On the global outlook, Mukundan said that growth is seen mainly in India, South America, and Southeast Asia, while places like China are seeing a slowdown.

“In terms of the market outlook, we have actually planned for the market to be more or less flat. The growth engines continue to be India and parts of America, especially the South American market and Southeast Asian market, which continue to grow. We do believe that in China, there is a bit of a slowdown happening .....we would fundamentally see our volumes fully sold out and we have not planned for any increase in prices,” he said.

Tata Chemicals Q1 Results

In Q1FY26, Tata Chemicals reported consolidated revenue of Rs 3,719 crore, slightly down from Rs 3,789 crore in Q1FY25. However, the company's Ebitda improved 13% to Rs 649 crore from Rs 574 crore in the same period last year. It reported an increase in margins to 17% compared to 15% in the year-ago quarter. Profit after tax (PAT) reached Rs 316 crore against Rs 175 crore in Q1FY25, marking an 80% YoY jump.

Tata Chemicals shares were trading 0.56% lower at Rs 936.1 apiece on the NSE at 3:11 p.m. In comparison, the benchmark Nifty50 stood at 24,685.35, down 0.61% in the closing session.