Tata Chemicals (TCL) said that CARE Ratings has reaffirmed the ratings assigned to the bank facilities of the company.
The rating on the long-term bank facilities has been reaffirmed at 'CARE AA+; Stable' while the rating on the short-term bank facilities has been reaffirmed at 'CARE A1+'.
The ratings assigned to the bank facilities of TCL continue to factor in the strong parentage of the Tata Group, TCL's market share in the global soda ash industry, geographical diversification with presence in India, North America, Europe and Africa and diversified product profile divided into Basic chemistry products and Specialty products segments.
TCL is the third largest Soda Ash producer globally, with over two third of its capacity being natural soda ash translating into cost-effective production. The specialty products segment includes agri-sciences (hosted under Rallis India), nutritional sciences, material sciences and energy sciences. Agri-sciences and nutritional sciences segments are experiencing good traction while the other segments are at a nascent stage.
Ratings also favourably factor in TCL's financial flexibility and re-financing capacity by being a part of Tata Group, a healthy financial risk profile characterized by robust debt coverage indicators and liquidity. TCL continues to maintain robust liquidity at both standalone and consolidated levels.
The ratings also factor in the recovery in volumes and realizations being witnessed in the global soda ash market in the current year after subdued demand in the first half of FY21 and the expected improvement in the PBILDT margins going forward. In Q1 FY22, the company reported a PBILDT margin of 21.6% as against that of 17.4% in Q1 FY21 and 12.9% in Q4 FY21.
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The above strengths are tempered by inherent risks associated with the soda ash business as the end user industries are dependent on economic growth, domestic soda ash pricing dynamics which are driven by capacity additions in the domestic market, foreign exchange fluctuations, and competition from import landed prices.
Tata Chemicals is a part of the Tata Group. TCL's business segments include basic chemistry products, salt making facility and specialty products.
The company's consolidated net profit surged to Rs 438.17 crore in the quarter ended March 2022 as against Rs 11.77 crore during the previous quarter ended March 2021. Sales rose 32.03% YoY to Rs 3480.67 crore in Q4 FY22.
The scrip gained 0.67% to currently trade at Rs 843.35 on the BSE.
On the technical front, the stock's daily RSI (relative strength index) stood at 49.263. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.
On the daily chart, the stock is trading below its 50-day, 100-day and 200-day simple moving average (SMA) placed at 893.32, 917.94 and 927.30, respectively.
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