Tata Chemicals gains 8% in 2 days as Tata Sons buys additional stake

On Wednesday, Tata Sons purchased 2.21 million equity shares of Tata Chemicals at Rs 287.58 per share on the NSE

Shares of Tata Chemicals rose 3 per cent to Rs 301 on the National Stock Exchange (NSE) on Thursday, surging 8 per cent in two days in an otherwise weak market after the promoter, Tata Sons, bought over 2 million shares via open market. In comparison, the Nifty50 index has slipped nearly 3 per cent in the same period.

On Wednesday, September 23, Tata Sons purchased 2.21 million equity shares of Tata Chemicals for Rs 63.56 crore. The promoter bought these shares at price of Rs 287.58 on the NSE though block deals, exchange data shows. The names of sellers were not ascertained immediately.

In the last month, the stock has underperformed the market and fell 11 per cent, as compared to 4 per cent decline in the Nifty, till Monday.

For the April-June quarter (Q1FY21), the company’s consolidated revenue from operations slipped 9 per cent year on year (YoY) to Rs 2,348 crore, owing to depressed standalone results and mixed performance at the subsidiary level. Consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) fell 10.4 per cent YoY to Rs 400 crore and the margin contracted by 61bps margin to 16.8 per cent, owing to pricing pressures in international markets, supply chain disruptions and Rallis’ negative EBITDA (Rs-9.8 crore).

“After the transfer of the high-value consumer business to Tata Global Beverages (now Tata Consumer), soda ash remains key focus for Tata Chemicals. We believe that the near-term softness in soda ash demand due to scaled down operations globally across various sectors and structural weakness in the automotive sector will weigh on Tata Chemicals earnings,” analysts at Emkay Global Financial Services said in result update. The stock was trading close to its target price of Rs 302 per share.

At 09:46 am, shares of Tata Chemicals were trading flat at Rs 294, against 1.1 per cent decline in the Nifty index. A combined 3.8 million equity shares have changed hands on the counter on the NSE and BSE.