Tata Chemicals — Interim Headwinds Mar Long-Term Upside: Nirmal Bang

We believe that the global slowdown could hurt Soda Ash end-use demand, thereby squeezing basic chemistry segment margins.

<div class="paragraphs"><p>Tata Chemicals Soda ash facility in South Africa. (Source: Company website)</p></div>
Tata Chemicals Soda ash facility in South Africa. (Source: Company website)

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Nirmal Bang Report

Our channel checks and interactions with Tata Chemicals Ltd.'s management suggest potential headwinds in terms of cost pressures in H2 FY23 and downside in demand in the event of a global economic slowdown/recession hurting traditional soda ash markets for glass in auto, construction and container glass.

This and the stock’s 28.61% rally year-to-date do pose some risk to the tactical momentum in the stock and hence we suggest entry on declines.

The stock looks reasonably valued at 12.9 times price-to-earnings on Sep-24E - at par with the long-term median reading on 12-month rolling PE of 12.9 times (post-consumer sale) versus earnings per share compound annual growth rate of 26.4% over FY22-FY25E.

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Nirmal Bang Tata Chemicals -Company Update.pdf


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