Tata Chemicals rallies 9%, hits record high in a range-bound market

The trading volumes on the counter jumped over four-fold today with a combined 7.16 million shares changing hands on the NSE and BSE till 11:33 am.

Shares of Tata Chemicals hit a record high of Rs 357, up 9 per cent on the BSE in the intra-day trade on Thursday in an otherwise range-bound market. The stock of the Tata Group commodity chemicals company surpassed its previous high of Rs 345.80, touched on August 25, 2020. In comparison, the S&P BSE Sensex was down 0.05 per cent at 44,159 points.

The counter has seen huge activities with trading volumes surging more than four-fold today. A combined 7.16 million shares had changed hands on the counter on the NSE and BSE till 11:33 am.

Currently, Tata Chemicals 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.

While announcing the July-September quarter (Q2FY21) results on October 29, the management of Tata Chemical said the company is witnessing the revival of the chemical sector and customer demand. The plant operations and capacity utilisation have gained momentum and are getting back to the pre-Covid levels.

In Q2FY21, the company’s consolidated revenues fell 6 per cent year-on-year (YoY), dragged down by weak demand and pricing pressures in certain markets, resulting in a 15 per cent decline in soda ash volume globally. India's market fared relatively better despite a YoY dip. Consolidated EBITDA (earnings before interest, taxes, depreciation, and amortisation) fell 31 per cent YoY and margin contracted 543 basis points YoY to 14.8 per cent.

Analysts at Emkay Global Financial Services said demand recovery looks encouraging in the domestic market, driven by detergent and automotive industries, while the demand pace of other geographies remained slower. The salt business continues to hold ground. The recovery in the company’s export market is important for a meaningful recovery in margins, the brokerage firm said in the result update.

Last financial year, Tata Chemicals had demerged its consumer products business consisting of the business of sourcing, packaging, marketing, distribution and sales of vacuum evaporated edible common salt for human consumption, spices, protein foods, and certain other food and other products in other group company Tata Consumer Products. Tata Chemicals shareholders allotted 114 shares of Tata Consumer Products for every 100 shares held in the company.