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Shares of Tata Chemicals soared by 3.1 per cent at Rs 1,120 per share on the BSE in Tuesday’s intraday trade. This came after a US based distributor American Natural Soda Ash Corporation (ANSAC) hiked prices of soda ash. Soda ash is a key product for Tata Chemicals.
Tata Chemicals exited ANSAC in December 2022, indicating that they have been independently managing their soda ash sales and distribution.
However, analysts suggest that if Tata Chemicals raises its soda ash prices in response to ANSAC's hike, it could experience enhanced margins and revenue. This price adjustment signals a rebound from previously low price levels attributed to oversupply and weak demand.
On Monday, ANSAC said that it plans to raise export prices by $25.00 per metric tonne on all non-contract sales of soda ash, effective from July 1, 2024.
According to analysts at Emkay Research, prices of soda ash fell by 21 per cent in the March-quarter of fiscal year 2023-24 (Q4FY24) from a year ago. The chemical is used to reduce the melting point of silica to produce glass, along with the soap and detergent industries.
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Tata Chemicals recorded a consolidated net loss of Rs 850 crore in the quarter ended March 31, contrasting with a profit of Rs 709 crore in the same period the previous year. Revenue from operations witnessed a decline of 21 per cent, amounting to Rs 3,475 crore. This marked the company's third consecutive quarter of decline in revenue.
At 11:32 AM; the stock of the company fell 4.04 per cent higher at Rs 1,119.50 per share. By comparison, the BSE Sensex rose by 0.20 per cent.
The shares of the company are trading at price to earnings valuation of 30.89 times with an earning per share of Rs 35.17, shows data from BSE.
