12 Nov , 2021 By : Kanchan Joshi
Tata Chemicals is a leading player in the global soda ash market. Under basic chemical, the Tata group's chemical subsidiary offers soda ash, soda bicarbonate, cement, salt, marine chemicals and crushed refined soda, while speciality chemical consists solution towards agro chemical through Rallis and other specialty solutions such as nutritional products and HDS.
Tata Chemicals share price has appreciated at around 79 percent CAGR (Compound annual growth rate) in the last two years. The Tata group stock has given multibagger return of over 187% in a year's period.
Brokerage and research firm ICICI Securities has revised its rating on the multibagger stock from Hold to Buy on the back of better soda ash realisation visibility on the back of favourable demand outlook. It has a target price of Rs1,035 per share on Tata Chemicals with a time horizon of twelve months.
Improvement in the soda ash pricing environment bodes well for future growth outlook. Revival in export demand for North America unit to sustain group performance, and higher share of speciality business to command better valuations for the overall group, which could act as key triggers for future price performance, as per the brokerage.
Tata Chemicals' lower growth from India and operational loss from Europe in second quarter dragged operational growth below ICICI Securities' expectations. The company reported a revenue growth of 16% YoY to Rs3,022.6 crore, led by higher growth in the basic chemical segment across four units while EBITDA margin improved to 16.6%, impacted by higher power & fuel cost.
Apart from Tata Chemicals, in its chemical coverage, ICICI Securities also likes Neogen Chemical as it believes future revenue growth would be increasing CRAMS opportunity. Its buy rating on Neogen comes with a target price of Rs1,515 per share.
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