Tata Chemicals surges 9% on strong June quarter results

The performance for the quarter was largely led by improved soda ash realisations across all geographies, which led strong top line growth for the quarter, said ICICI Securities.

Shares of Tata Chemicals surged 9 per cent to Rs 1,042.55 on the BSE in Wednesday’s intra-day trade after the company reported a strong 87 per cent year-on-year (YoY) jump in its consolidated profit after tax (PAT) at Rs 641 crore in the June quarter (Q1FY23). The Tata Group company had posted a PAT of Rs 342 crore in the corresponding quarter of the previous fiscal.

The company’s reported income from operations grew 34 per cent YoY at Rs 3,995 crore in Q1FY23 as compared to Rs 2,978 crore in Q1FY22. Earnings before interest, taxes, depreciation, and amortization (ebitda) margins for the quarter rose 520 bps to 25.4 per cent (highest in the history) owing to lower power & fuel and freight cost.

Tata Chemicals said the operating performance reflects improved realisations, efficient cost management and optimum capacity utilization in challenging market conditions, and in the context of rising input and energy costs. The growth in basic chemical was largely led by strong realisations of soda ash across all geographies.

The global demand environment continues to be positive across the company’s products and their applications. While this positive momentum is expected to continue in the near to medium term, the input side environment especially energy remain at elevated levels coupled with logistic challenges that continue to be seen in the market, the management said.

The performance for the quarter was largely led by improved soda ash realisations across all geographies, which led strong top line growth for the quarter. However the volume growth remained muted for the quarter, ICICI Securities said in a note.

Going ahead, since there is some capacity closure at China along with no major capacity addition of soda ash across the globe, we expect soda ash market can remain buoyant. On the other side, any slowdown in the construction demand owing to recessionary fear can put pressure on the demand environment of soda ash and thereby its prices in short term. This can impede growth of Tata Chemicals owing to high base in the coming quarters, the brokerage firm said.

At 09:47 am, the stock traded 8.5 per cent higher at Rs 1,038, as compared to 0.20 per cent decline in the S&P BSE Sensex. It had hit a 52-week high of Rs 1,158 on October 18, 2021. The trading volumes at the counter rose an over three-times with a combined 4.2 million equity shares changing hands on the NSE and BSE.