Tata Chemicals

02 Feb

Expect export market to bounce back in Q4 -Tata Chemicals

Update on the Indian Equity Market:

On Tuesday, NIFTY closed at 14,648 (+2.5%). Top gainers in NIFTY50 were Tata Motors (+16.9%), Shree Cement (+7.2%) and UltraTech Cement (+6.9%). The top losers were HDFC Life (-2.5%), Bajaj Finserv (-2.2%), and Hero Motocorp (-1.5%). The top sectoral gainers were AUTO (+4.1%), REALTY (+3.8%), and BANK (+3.5%) and there were no sectoral losers.

Excerpts of an interview with Mr. R Mukundan, MD & CEO – Tata Chemicals with CNBC -TV18 dated 29th January 2021:

  • Tata Chemicals is expecting the export market to bounce back in the 4QFY21 quarter.
  • They are expecting exports from the US to be better than last year’s levels in Q4. Demand in South-East Asia should also normalise by H1-H2 FY22.
  • The market in which the Magadi division faced a bit of pressure is South-East Asia. There the tourism industry is hit very hard. The demand for container glass which goes into beverages and drinks had been impacted severely.
  • They believe by H1-H2 of FY22 that demand would come back. But what Magadi has done is to get a lot of cost orders in the system. So they have posted a solid margin this quarter and will continue to maintain a good set of numbers.
  • He thinks that revenues of Rs 170 bn in the next 4-5 years are doable. Rs 170 bn is board-approved plan and that guidance still remains. They are not way off from that.
  • By the end of FY21, some of the projects will come on-stream, and by 2022-23 almost 50 percent of the capital would be deployed, and it will be on-stream.
  • They anticipate an incremental revenue of about Rs 14 bn and an incremental contribution or EBIT margin of close to about Rs 6 bn as a result of investments of Rs 2,600 crore.

Consensus Estimate: (Source: market screener and investing.com websites)

  • The closing price of TATACHEM was ₹ 521/- as of 2-February-2021.  It traded at 32x/ 15x/ 13x the consensus earnings estimate of ₹ 16.5/ 34.5/ 39.7 for FY21E/22E/23E respectively.
  • The consensus price target is ₹ 448/- which trades at 11x the earnings estimate for FY23E of ₹ 39.7/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

 

 

 

 

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26 Nov

Expect to touch Rs 170-180 bn revenue in a couple of years – Tata Chemicals

Update on Indian equity market:
After crossing 13,000 for the first time ever, the Nifty-50 could not hold onto the gains as the monthly expiry led volatility kicked in the markets. Nifty closed the day 185 points lower at 12,870. Within the index, only 8 stocks closed the day in green led by ONGC (5.9%), GAIL (2.1%) and ADANIPORTS (1.9%) whereas EICHERMOT (-3.5%), AXISBANK (-3.2%) and KOTAKBANK (-3.2%) led the laggards. Among the sectoral indices, all but one index, PSUBANK (1.9%) traded the day in the red led by REALTY (-2.3%), PHARMA (-2.1%), and BANK (-1.8%).
Excerpts of an interview with Mr. R Mukundan, CEO & Managing Director, Tata Chemicals (TataChem) published on CNBC-TV18 dated 24th November 2020:
Tata Chemicals 2QFY21 result was operationally weaker due to pressure on margins in the basic chemistry segment. All the units are working at full capacity though and the company sees no demand problem from 2HFY21.
The nutrition and agri segment performed well during the quarter. These two segments were unaffected due to the pandemic. Q1 was good and Q2 continued to be even better. Sequentially, material science has done better than 1QFY21.
He said that there are some pricing issues in the export market, but India is doing well. The UK has performed well through the pandemic. The overall momentum is positive. All the sectors are beginning to open up and the company expects to be back to normal somewhere around 2QFY22E.
Regarding the pricing power, he mentioned that as the volumes pick up, the pricing power comes back especially in the material segment.
The company is focusing on the nutraceutical segment and increased allocation of assets. Revenue from this business can scale up to Rs 50bn with this capacity addition.
The company is expecting good growth in the silica business from 3QFY21. Renewables are a big market opportunity for the company currently.
With the capacity additions and business racing towards pre-covid levels, the company is confident of achieving an annual revenue target of Rs 170-180bn in the next couple of years.
Consensus Estimate: (Source: market screener website)
The closing price of Tata Chem was ₹ 368/- as of 25-Nov-2020. It traded at 21x/ 11x/ 9x the consensus EPS estimate of ₹ 17.2/ 34.4/ 40.4 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 332/- implies a P/E multiple of 8x on FY23E EPS of ₹ 40.4/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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01 Oct

The pandemic has led to a behavioral change toward Health and Wellbeing – Tata Chemicals

Update on the Indian Equity Market:
On Wednesday, the consolidation in the equity markets continued with the Nifty ending marginally higher at 11,227 (0.2%). Among the stocks, GRASIM (+3.0%), TECHM (+2.8%), and TITAN (+2.6%) led the gainers while BPCL (-9.0%), BHARTIARTL (-3.7%), and TATASTEEL (-3.1%) led the laggards. FMCG (+1.3%), PHARMA (+0.5%), and IT (+0.4%), the three sectors considered defensive led the index gainers. METAL (-2.1%), PSU BANK (-1.1%), and REALTY (-0.8%) led the sectoral losers.

Edited excerpts of an interview with Mr. Rahul Gupta, Business Head, Nutritional Sciences, Tata Chemicals with ETHealthworld on 29th September 2020:
• One of the consequences of the pandemic has been a paradigm shift in the health consciousness and food preferences of consumers.
• Following a healthy lifestyle has increased the significance to increase gut health and immunity by following a healthier diet which includes consuming more fortified products. This increased inclination towards nutritional products and supplements coupled with the increasing disposable income is now changing the consumer’s purchasing pattern which has provided an impetus to the wellness sector.
• The F&B, pharma, and nutrition companies are forced to present well-researched and innovative products to suit the changing needs of the customers. The desire to build a stronger immunity and lead a healthier lifestyle will only evolve consumer behavior patterns towards the nutraceuticals industry.
• Tata Chemicals is witnessing 100% growth driven by a focus on health and immunity. The virus outbreak will reset the baseline for health and nutrition companies which will help reshape the market by offering products backed by strong science.
• Tata NQ, the nutritional solutions arm of Tata Chemicals has invested in researching new age products with the help of machine learning and big data at the R&D centers over the past years.
• The work on building one of the biggest global knowledge bases on the gut microbiome, mapping subjects across geographies, age groups, genders, sedentary habits, and other parameters is underway.
• The new trend in consumers’ food patterns is the inclusion of more immunity building nutrients in the daily diet to strengthen health and protect from the virus. There is a huge demand for preventive nutraceutical products and natural products in the market, across all age groups.

Consensus Estimate: (Source: market screener website)
• The closing price of Tata Chemicals was ₹ 300/- as of 30-September-2020. It traded at 13x/ 8x/ 7x the consensus earnings estimate of ₹ 23.5/ 35.9/ 41.3 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 327 implies a PE multiple of 8x on FY23E EPS of ₹ 41.3/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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