Buy Tata Chemicals; target of Rs 1340: Geojit

Geojit's research report on Tata Chemicals

Tata Chemicals Limited (TCL) is the world’s third largest producer of soda ash with manufacturing facilities in Asia, Europe, Africa and North America. It also has a strong focus on consumer, Agri and specialty businesses. Consolidated revenue rose 34.2% YoY and 14.8% QoQ to Rs. 3,995cr in Q1FY23, led by strong performance across businesses and geographies. EBITDA grew 68.8% YoY to Rs. 1,015cr and EBITDA margin improved 521bps YoY to 25.4%, driven by operating leverage. PAT jumped 87.2% YoY to Rs. 641cr. Demand for soda ash and bicarb is likely to continue in the short to medium term, along with supply tightness. Revised pricing, increasing volumes and strong demand across products is expected to boost the topline and support margins.

Outlook

Hence, we reiterate our BUY rating on the stock with a revised target price of Rs. 1,340 based on 20x FY24E adj. EPS.

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