Tata Chemicals trades lower after Q2 profit takes a knock

Motilal Oswal analysts says there are short-term challenges in the soda ash demand due to new capacities from China but the situation is expected to balance out in the medium term

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The Tata Chemicals stock opened nearly a percent lower on November 13 after the company posted a 28 percent decline in net profit.

In a regulatory filing after the market hours on November 10, Tata Chemicals  reported a 28 percent decline in consolidated net profit at Rs 495 crore for the second quarter of this fiscal year. Its net profit stood at Rs 685 crore in Q2FY24.

Income from operations fell to Rs 3,998 crore from Rs 4,239 crore in the year-ago period.  Earnings before interest, taxation, depreciation and amortisation (EBITDA) were at Rs 819 crore, down 11 percent.

Also read: Tata Chemicals Q2 net profit dips 28% to Rs 495 crore

Analysts at Motilal Oswal cut FY2024/FY2025 EBITDA estimates by 12 percent/8 percent “due to unfavourable demand-supply dynamics persisting in the global soda ash industry and continued pricing pressure across regions”.

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They reiterated their “neutral” rating with a target price of Rs 920. The brokerage said there were certain short-term challenges in the soda ash demand-supply dynamics owing to new capacities from Inner Mongolia, China. The situation, however, was expected to balance out in the medium term with the emergence of new applications, such as solar glass and lithium-ion batteries.

At 9.30 am, the stock was trading at Rs 957.90. At the close of Muhurat trading on November 12, Tata Chemicals was at Rs 966.30.

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