NEW DELHI: Shares of Tata Group firm , the world’s third largest producer of soda ash, hit a fresh record high of Rs 1,182.40 on BSE earlier today. But upside on the counter looks limited following a 35 per cent rally in the last one month.
Analysts said soda ash prices are expected to remain firm in the next 18-24 months and that the demand, especially from detergent and glass industries, have been strong in spite of high prices, but the stock might have rallied too fast too soon.
As per consensus average analyst target, compiled by Trendlyne, further upside looks unlikely on the counter. The revival in export demand for the North America unit and a higher share of specialty business would be fresh triggers for the stock, analysts said.
Tata Chemicals offers soda ash, sodium bicarbonate, cement, salt, marine chemicals and crushed refined soda. Its speciality chemical portfolio comprises agro chemicals through
and other specialty solutions such as nutritional products and HDS.
ICICI Direct noted that basic chemicals form 75 per cent of Tata Chemicals’ revenue while the rest comes from specialty products. Post the company’s Q1 show, the brokerage has upped Tata Chemicals’ target to Rs 1,370 per share from Rs 1,155 per share but has cut its rating to ‘Hold’ from ‘Buy’.
On Friday, the scrip climbed 5.83 per cent to hit a new high of Rs 1,182.40, taking its year-to-date gains past 32 per cent. ICICI’s target suggests a potential 16 per cent upside for the stock. The average brokerage target, however, stands at Rs 1,161.
The management expects the positive momentum to continue in the near to short term and aims to leverage digitalisation for further growth. said the ongoing global soda ash shortage will further improve realisations through heightened pricing.
“Demand for soda ash and bicarb is likely to continue in the short to medium term, along with supply tightness. Revised pricing, increasing volumes and strong demand across products is expected to boost the topline and support margins,” said Geojit Financial Services, as it suggested a 12-month target of Rs 1,340 for the stock. This target suggests a 13 per cent upside.
The Tata group company reported an 86.25 per cent increase in consolidated net profit at Rs 637 crore for the June quarter. This is on a 34.15 per cent rise in revenue from operations at Rs 3,995 crore. The basic chemical segment logged a 41 per cent YoY growth while speciality products saw 17 per cent growth for the quarter.
Tata Chemicals, Geojit said, has been reporting solid performance consistently, despite a challenging environment. “We remain optimistic about continued soda ash demand across geographies, which will boost the topline,” it said.
Kotak Institutional Equities has a target of Rs 1,240, while
Securities sees the stock at Rs 1,210. These targets suggest up to 5 per cent potential upside for the stock.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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