Why Tata Chemicals Share Price is Rising

Tata Chemicals is a key player in the global chemicals industry, with a wide range of products spanning basic chemicals, crop nutrition, and specialty chemicals.

The company is known for its Mithapur facility, which is one of the largest integrated chemical complexes in the country. Its operations play a vital role in supplying essential chemicals to industries both in India and globally.

On 17 October 2024, Tata Chemicals announced its second-quarter results, revealing a sharp 54.7% drop in net profit. The company reported a consolidated net profit of Rs 1.9 billion (bn) for the quarter ended September 2024.

This is a significant decline compared to the Rs 4.3 bn profit earned in the same quarter last year. Meanwhile, revenue from operations remained steady at Rs 40 bn, with no major change from the Rs 39.9 bn recorded during the same period of the previous year.

The drop in profitability was primarily due to the impact of unusually heavy rains in July and August. These conditions disrupted production at its Mithapur plant, reducing output and affecting overall margins.

Despite these weaker-than-expected results, Tata Chemicals share price surged 9% yesterday. This leaves many investors wondering what is driving this surprising positive sentiment around the company.

Let's find out.

Reports of Tata Sons IPO

Tata Chemicals share price surged 14% following reports that the Reserve Bank of India (RBI) rejected Tata Group's request to exempt Tata Sons from the mandatory stock exchange listing.

The news also positively impacted Tata Investment Corporation shares, which rose by 9.5% on the BSE.

According to reports, Tata Sons will now have to list itself by September 2025. The RBI turned down a proposal from the company seeking an exemption from listing its equity shares.

Under current RBI regulations, entities classified as upper-layer NBFCs must be listed by the September 2025 deadline. The Tata Group is also exploring options to restructure the debt held by Tata Sons.

Strategies under consideration include repaying a portion of its debt or transferring its stake in Tata Capital to another entity. This would enable Tata Sons to deregister as a core investment company (CIC) and no longer be classified as an upper-layer NBFC.

Tata Sons' balance sheet for FY23 shows borrowings amounting to Rs 20.3 billion (bn). If the company manages to reduce its debt to below Rs 1 bn, it may no longer be considered an upper-layer NBFC by the RBI.

According to the reports Tata Sons' last year's estimated was Rs 11 trillion (tn). A potential sale of 5% of its stake through an IPO could be valued at Rs 550 bn, marking the largest IPO in Dalal Street's history.

This would be nearly double the size of Hyundai India's Rs 278.7 bn IPO. However, given the consistent rise in the value of several Tata Group companies, Tata Sons' valuation could now be even higher.

The ownership structure of Tata Sons indicates that 65.9% of the company is held by Tata Trusts, 18.4% by Shapoorji Pallonji, 12.8% by various Tata Group companies, and 2.8% by the Tata family. Tata Motors and Tata Chemicals each hold about a 3% stake, while Tata Power owns 2% and Indian Hotels holds 1%.

Tata Chemicals share price saw a significant rise as the company is expected to be a major beneficiary if Tata Sons proceeds with its IPO.

It is important to note here that as of today Tata Chemicals share price is on a downward trajectory as it slipped 3.8% today.

What Next?

Tata Chemicals is focused on growing its core operations while meeting sustainability goals. The company has an ongoing expansion plan to boost production capacities for soda ash, silica, and salt.

It plans to invest approximately Rs 23 bn between FY25 and FY28, with the expansion of soda ash and silica as key projects. This will help the company strengthen its presence in industrial markets and meet increasing demand.

In terms of sustainability, Tata Chemicals is scaling up its environmental initiatives. It is working on reducing emissions, conserving water, and enhancing biodiversity. The company is also expanding biomass co-firing and energy crop plantations, alongside setting up solar energy projects.

These efforts are aligned with its broader environmental, social, and governance (ESG) goals, which include initiatives like planting saplings and conserving whale sharks.

Tata Chemicals' focus on sustainable practices, alongside its expansion in core product lines, positions the company for future growth. However, external challenges like weather disruptions and global market volatility will remain factors to watch.

The company aims to generate cash and reduce debt, which will be crucial for maintaining financial health and driving future strategies.

How Tata Chemicals Share Price has Performed Recently

In the past five days, Tata Chemicals share price is up 3.8%. In the last month, it has surged 10.6%.

In 2024, so far its share price is up 2.3%. Additionally, in the past one year it has rallied 16.9%

The stock touched its 52-week high of Rs 1,349.7 on 7 March 2024 and a 52-week low of Rs 933 on 29 February 2024.

About Tata Chemicals

Tata Chemicals is a global company with interests in businesses that focus on basic chemistry products and specialty chemistry products.

The company's basic chemistry product range provides key ingredients to some of the world's largest manufacturers of glass, detergents, and other industrial products.

Tata Chemicals currently is the world's third largest producer of soda ash with manufacturing facilities in Asia, Europe, Africa, and North America.

The company has a strong position in the crop protection business through its subsidiary company Rallis India.

It has established world class research and development (R&D) capabilities with a dedicated band of research and scientific personnel working at its facilities in Pune and Bangalore in the emerging areas of material sciences, nutritional sciences, nanotechnology, biotechnology, and agriculture sciences.

For more details about the company, you can have a look at Tata Chemicals factsheet and quarterly results on our website.

You can also compare Tata Chemicals with its peers -

Tata Chemicals vs Rallis India

Tata Chemicals vs Gujarat State Fertilizers

Tata Chemicals vs Deepak Fertilisers

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy investing!

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