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Buy Tata Chemicals, target Rs 418: Karvy
Karvy has maintained a buy rating on Tata Chemicals, with a target of Rs 418. At the current market price of Rs 275 the stock is trading 12.5x FY08E and 8.7xFY09E expected earnings.
Karvy Stock Broking has maintained a buy rating on Tata Chemicals with a target of Rs 418 in its March 26, 2008 research report. "Tata Chemicals announced definitive financing plans to raise USD 850 millions debt to fund its acquisition of US based soda-ash maker General Chemical Industrial Products. We believe the acquisition will create synergies for the Tata Chemicals Group as this acquisition is going to give to access low-cost natural soda ash reserves at green river basin in Wyoming, USA."
"The acquisition will also improve the profit margin and growth prospect of Tata Chemicals as natural soda ash has higher operating margin of 30% compared with 18% of synthetic soda ash. At the current market price of Rs 275 the stock is trading 12.5x FY08E and 8.7xFY09E expected earnings. We maintain our target price of Rs 418 and rate the stock as a BUY", says Karvy Research report.
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