Motilal Oswal - MOSL: TATA CHEMICALS (Neutral)-Recovery in Soda Ash volumes drives NA and India business

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Motilal Oswal

Sumant Kumar

MOSL: TATA CHEMICALS (Neutral)-Recovery in Soda Ash volumes drives NA and India business

TATA CHEMICALS: Recovery in Soda Ash volumes drives NA and India business; Result above our estimate

(TTCH IN, Mkt Cap USD2.8b, CMP INR824, TP INR810, 2% Downside, Neutral)

TTCH’s consolidated EBITDA was above our estimate, led by a strong volume recovery in North America and India. The strong performance was despite higher energy cost in India and the UK. In North America, the spot market in Soda Ash is witnessing a price recovery, and the contract market is expected to follow suit on renewals.
Factoring its performance in 1QFY22, a faster volume recovery, and improved profitability in IMACID (JV of TTCH to manufacturer phosphoric acid), we have increased our FY22E PAT estimate by 54%. We have increased our FY23E PAT estimate by 8% as we had already built in a volume recovery earlier.
On a one-year forward basis, TTCH has historically traded at an average EV/EBITDA of 10.2x/9.8x/8.7x in the last three/five/10 years. It is now trading at 11.4x FY22E EV/EBITDA, implying a premium of 12%/17%/32%. The recent performance in the stock price was on the back of TTCH’s intention to enter into EV Cell manufacturing, but it is yet to finalize its plans. Also, execution risk persists. So, we maintain our Neutral rating with a SoTP-based TP of INR810/share.

08/08/2021 14 EN

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Sumant Kumar

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MOSL: TATA CHEMICALS (Neutral)-Recovery in Soda Ash volumes drives NA and India business

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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