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Tata Chemicals gained a little over 4 percent intraday on Tuesday as investors bet on Motilal Oswal’s views on the stock.
The brokerage firm initiated coverage on the stock with a buy call and a target of Rs 940. It implies an upside potential of 36 percent.
Motilal Oswal believes that the company will use cash cows to invest in growth businesses and will focus on consumer and speciality products. It expects existing salt distribution network to boost consumer business.
The firm also expects Tata Chemicals to be net debt free by FY20, while RoCE will also improve considerably. This, it expects through reduction in debt via sale of fertilizer business and investments.
Going forward, it sees revenue and net profit to grow at a CAGR of 9/22 percent over FY18-20.
The stock has gained over 6 percent in the past one month, while its three-day gain stood at 4 percent.
At 13:00 hrs Tata Chemicals was quoting at Rs 717.00, up Rs 25.05, or 3.62 percent. It has touched an intraday high of Rs 721.35 and an intraday low of Rs 698.90.
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