TATA CHEMICALS: Restructuring could be win-win for all; Expect value unlocking for TTCH’s shareholders
(TTCH IN, Mkt Cap USD2.8b, CMP INR705, TP INR959, 36% Upside, Buy)
Expected deal scenario: Equity swap or part-cash-part equity transaction
We believe that the speculated deal would either be a complete equity swap or a part-cash-part-equity transaction. We value TTCH’s consumer business at 22x FY18 EBITDA (~30% premium to its trading EV/EBITDA), and TCO at 15x FY18 EBITDA (~15% premium to its trading EV/EBITDA). For an equity swap, we estimate that TGBL would have to issue 320.9m shares for TTCH’s consumer business and 146.7m shares for TCO. However, for a ‘50% equity - 50% cash’ deal, the additional shares to be issued would be 160.5m for TTCH’s consumer business and 73.3m for TCO. Additionally, for ‘50% equity - 50% cash’ deal, TGBL would have to raise debt of INR43.4b for TTCH’s consumer business and INR19.8b for TCO.
Tata Chemicals is engaged in the production and selling of interests that focus on LIFE - living, industrial and farming essentials. Co.'s products are used in a wide range of pharmaceutical, food processing and industrial applications. Living essentials - Tata Salt, I-Shakti, Tata Salt Lite; Tata Salt Flavoritz, Tata Salt Plus, i-Shakti Dals and Tata Swach. Industry essentials - soda ash; sodium bicarbonate; chemicals: caustic soda, chlorine based products, bromine based products, gypsum, sodium tripolyphosphate, phosphoric and sulphuric acids; industrial salt; and cement: Tata Shudh. Farm essentials - fertilizers: Tata Paras urea, DAP, NPK, and SSP.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.