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MOSL: TATA CHEMICALS (Buy)- Focus on sodium bicarb to capture impending demand

We attended Tata Chemicals’ (TTCH) analyst meet, wherein Mr Zarir N Langrana –
Executive Director & President - Global Chemicals Business – updated on the industry
trends in sodium bicarb/soda ash, the upcoming project in silica and nutraceuticals, the
capex plan and the battery project. Key highlights:

Thermal plants in India to drive bicarb demand
** Management clearly indicated that it intends to incrementally focus on increasing sales of sodium bicarb, which is a value-added product, is margin accretive and is finding increasing usage in various applications.

** At 4.5MMT, global demand for sodium bicarb is growing steadily at 5%.

** Bicarb demand in India stands at 300kMT and is growing at 8%. The growth pace is likely to accelerate significantly given the need to install dry sorbent injection (DSI)-based flue gas desulphurizer (FGD) at thermal power plants under the revised emission norms.

** TTCH has already started supplying commercial-grade bicarb to Tata Power and NTPC. With the increasing opportunity therein, TTCH is expanding bicarb capacity at its Mithapur plant by 40% to 140kMT, which is likely to come on stream by Sep’21. Pricing of FGD grade bicarb ranges between that of pharma and animal feed grade bicarb.

** If thermal plants in India install DSI-based FGD, it would generate significant demand and the company would have to expand capacity further apart from the existing plan to increase it by 40%.

** Also, in the UK, TTCH plans to increase bicarb capacity gradually over the coming years.