Tata Chemicals - Rich Valuations A Key Concern: Nirmal Bang 

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Nirmal Bang Report

Tata Chemicals Ltd. stock is expected to witness 31.3% downside from current market price post the 63.9%/252% rally in the last three months/12 months.

The stock trades at rich price-to-earning of 38.9 times/22.1 times on FY22E/FY23E earnings per share, which prices in the improving fundamentals over FY21E-23E approximately our FY23E Ebitda is the highest in 15 years.

The stock’s valuation looks stretched as it implies a 143%/35% premium to the five-year median/SD+1 readings on 12-month rolling PE of 9.1 times/16.4 times versus earnings per share compound annual growth rate of 5.4% over FY20-FY23E, which is more relevant than the 43.3% CAGR on the beaten down FY21E as base.

This premium is likely due to bullish expectations on electric vehicle battery business pending clarity and chemical earnings.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.