Tata Group chemical stock down 13% in a month. Should you buy post Q3 results?
Premium- Tata Chemicals shares have shed around 13% in a month, whereas it is up over 58% in the last one year
Shares of Tata Chemicals have declined about 5% in five trading sessions after announcing Q3 results last week in which the Tata Group company reported a 69% growth in consolidated net profit at ₹340 crore as compared to ₹200.7 crore in the year-ago quarter. The chemical stock has shed around 13% in a month, whereas it is up over 58% in the last one year.
The company's revenue from operations during October-December 2021 jumped 20.5% to ₹3,141 crore as compared to ₹2,606 crore in the year-ago period. Its consolidated gross debt stood at ₹6,937 crore, compared with ₹7,108 crore as on September 30, 2021.
“Tata Chemicals’ consolidated PAT was a huge surprise based on the beat in US/UK revenues, US Soda Ash volume and JV’s share of the PAT. We are upgrading Tata Chemicals shares from Accumulate to Buy based on 18.3% increase in SOTP-based target price (TP) to ₹1,101," said analysts at Nirmal Bang in a note.
The brokerage's catalysts for the Buy are positive outlook for Soda Ash, which will enjoy a cyclical upswing in margins for at least 2 years based on our industry scenario analysis, the positive risk-reward and its 23.2%/27.2% hike in FY23E/FY24E EPS, based on higher pricing in the Chemicals segment.
Consolidated EBITDA came in line with our estimate, with a better than expected operating performance in India and the UK. However, a subdued operating performance in North America and Africa partially offsets growth, said brokerage Motilal Oswal. Further, it believes that the challenging environment of increasing input costs (energy and freight) is likely to persist.
Motilal Oswal has maintained its Neutral rating on Tata Chemicals shares with a SoTP-based target price of ₹940 apiece.
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The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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