Buy Tata Chemicals; target of Rs 473: PLilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher`s research report on Tata Chemicals“We met up with the senior management team of Tata Chemicals (TTCH). Management remains pretty confident of a turnaround in UK/Kenya operationswhile Kenya is likely to see a steady state performance from Q3FY15E, UK business will see steady state performance from Q3FY16E once the steam turbine is implemented. We have conservatively modelled for UK/Kenya EBITDA of Rs2.6bn in FY16E compared to loss of Rs460m in FY14E. Global soda ash demand remains favourable and pricing is likely to remain firm over the next few quarters.” “With the worst behind them and clarity on restructuring emerging in UK/Kenya, we believe, re-rating for TTCH would continue. Our back-of-the envelope calculation suggests that the value of TTCH’s quoted investments (Exhibit 7) works out to Rs60/share, while the value of TTCH’s holding in Tata Sons (Exhibit 8) works out to Rs444/share. Typically, investors’ do not assign any value to these investments as historical evidence suggests that monetization of cross holdings in Tata Group is not practical. However, these investments lend support to the Balance Sheet. We have changed our valuation methodology from P/E valuation earlier to SOTP valuation currently in order to reflect the changing business dynamics and true intrinsic value of individual business units. Our SOTP based target prices stands at Rs473 (previous target price of Rs430 was based on 12x FY16E earnings),” says Prabhudas Lilladher research report. 

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