MOSL: TATA CHEMICALS (Buy)-Signs of recovery across most key markets; Energy cost – a key monitorable
Tata Chemicals: Signs of recovery across most key markets; Energy cost – a key monitorable
(TTCH IN, Mkt Cap USD2.1b, CMP INR558, TP INR703, 26% Upside, Buy)
- Operationally in-line: Revenue grew 8% YoY to INR27.6b (our estimate: INR28.7b) in 4QFY19. EBITDA rose 3.6% YoY to INR5.3b (our estimate: INR5.4b), with the margin contracting 80bp YoY to 19.2% (our estimate: 18.7%). Adj. PAT remained flat at INR3.1b (our estimate: INR2.6b). PBT was reported in-line, however adj. PAT came in higher than expected due to deferred tax benefit of INR462m which led to significantly lower than expected tax rate of 6.2% (our estimate: 23.9%).
- FY19 performance: Revenue grew 10% to INR112.9b, with margin contraction of 280bp to 18.5%. Adj. PAT was down 10.8% YoY to INR10.9b.
- Good show across geographies, barring Europe: TTCH showed signs of revival across geographies, except Europe. EBITDA/MT increased 43% YoY to USD53.3 in North America (realization up 5% YoY to USD226.3/MT) and 46% YoY to USD56.1/MT in Africa (realization up 3% YoY to USD255.3/MT). India business delivered 4% YoY growth in soda ash volumes and also improved realization, but profitability was marred by higher power and plant fixed cost. Europe was subdued with EBITDA/MT declining 65% YoY to GBP28.3 due to higher energy and plant fixed cost.
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.
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