ICICI Direct has recently published a report on Tata Chemical Limited and recommended investors buy the stock of the company for a target price of Rs 1370 apiece. According to the brokerage firm, Tata Chemicals reported strong numbers across the board largely led by robust realisation growth across all geographies in the basic chemical segment. Considering the estimated target price by the brokerage firm, if you buy the stock of the company at the current market price, you can expect potential gains of around 23% in the 12 months.
Stock Outlook & Returns
12 August, the current market price of Tata Chemical Limited stock is Rs 1,118.90 apiece, today it gained 3.85%. The current market price is Rs 345.55 above the 52 week low level of Rs 773.35 and Rs 41.1 below the 52 week high of Rs 1160.
Over the week, the shares of the company gained 17.79%. In the past 1 and 3 months, its shares gained 33.99% and 19.75%, respectively. Over the year, the share price moved up by 27.75%. In the past 3 and 5 years, the shares gained 97.22% and 93.46%, respectively.
The TTM PE ratio is 18.29 and the P/B ratio is 1.49, respectively. TTM EPS is Rs 61.18. Its ROE is 6.88%. Its dividend yield is 1.12% and the face value is Rs 10. Tata Chemicals Limited is a Midcap Tata Group stock having a market cap of Rs 28,504 crore.
Tata Chemicals reported strong numbers across the board largely led by robust realisation growth across all geographies in the basic chemical segment.
- Reported revenue growth of 34.2% YoY to Rs 3995 crore, led by good growth in the basic chemical segment (+41%YoY) and in speciality products (+17% YoY).
- Gross margins improved 190 bps YoY to ~80.1% while EBITDA margin expanded 520 bps YoY to 25.4%, the highest till date.
- EBITDA was up 69% YoY to Rs 1015 crore.
- Adjusted PAT was at Rs 544.7 crore vs. Rs 288 crore in Q1FY22.
What should investors do?
The stock appreciated at 55% CAGR in last three years. "We revise our rating from HOLD to BUY on the stock due to better soda ash pricing environment Target Price and Valuation: We value Tata Chemicals at SOTP valuation to arrive at a revised target price of Rs1370/share (earlier Rs 1155/share)," the brokerage said.
Key triggers for future price performance
Improvement in the soda ash pricing environment bodes well for future growth outlook. Revival in export demand for North America unit to sustain group performance. Higher share of speciality business to command better valuations for the overall group.
About - Tata Chemical Limited
Commencing operations in 1944, Tata Chemicals has come a long way to become one of the top five players in the global soda ash market. Under basic chemical, Tata Chemical Limited offers soda ash, sodium bicarbonate, cement, salt, marine chemicals and crushed refined soda. Speciality chemical consists of solution towards agrochemical through Rallis and other specialty solutions such as nutritional products and HDS. Basic chemical forms 75% of overall revenue while the rest comes from speciality products.
The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.