Motilal Oswal's research report on Tata Chemicals
Tata Chemicals (TTCH)’s 2QFY26 consolidated EBITDA declined 13% YoY, led by subdued performance in America (TCNA)/Africa (TCAHL)/Rallis, with EBITDA down 65%/58%/5% YoY due to a weak demand-supply scenario. India/Europe (TCEHL) delivered a healthy performance with EBITDA up 67%/50% YoY. India operations were better, led by an increase in capacity, operating leverage, and a lower base for the last year. Due to heavy rains in 2QFY25, TTCH had a total cost impact of ~INR400-440m with a production loss of ~30KMT/40KMT of soda ash/salt. However, TCEHL witnessed an improved performance due to a reduction in power and fuel costs (mainly due to the cessation of Lostock in the UK).
Outlook
We expect TTCH to record a revenue/EBITDA/adj. PAT CAGR of 5%/17%/54% over FY25-28. Reiterate Neutral with an SoTP-based TP of INR900.
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