Recommendation CMP Target Price Time Horizon
Buy Rs. 943 Rs. 1115 12 Months

Tata Chemical is one of the oldest company from Tata Group, they are the third largest soda Ash and sixth largest sodium bicarbonate producer in the world, Company has divested all its non-core business and are now scaling up the core basic and specialty chemicals business. The company operates in four divisions namely Nutritional Science, Energy Science, Agro Science and Material Science

Stock Details

Market Cap. (Cr.) 22936.04
Face Value 10.00
Equity (Cr.) 254.82
52 Wk. high/low 1158/404.50
BSE Code   500770
Book Value (Rs) 562.30
Industry Chemicals
P/E 37.10


Share Holding Pattern %


FIIs 14.45
Institutions 20.02
Non Promoter Corp. 4.66
Public & Others




Total 100.00

Price Chart


Key Investment Rationale:

  • Soda ash is a key raw material in the process of lithium – ion batteries, as the world is planning to shift from conventional vehicle to EV demand for soda ash is going to gain pace.

  • China being the largest exporter of chemical to the world is discouraging chemical factory because of environmental issue which is opening huge opportunity for Tata Chemical and in second quarter they have also started exporting to china.

  • Company has set up recycling plant of lithium ion batteries and has plan to increase it to 120 tonnes per annum in which they extract metal salts of lithium,cobalt,nickle and manganese, these  salts are used in paints, ceramic pigments industry.

  • There has been constant increase in soda ash prices as company has taken price hike of ₹ 3000/tonne over April- September and in October taken price hike of ₹4000/ tonne in October 21.

  • Company has expansion of ₹ 2700 crore in Mithapur plant which is expected to come on stream by FY24, this is going to drive incremental revenue for the company.

  • In 2QFY22 company reported solid number where Revenue increase by 16% YoY EBITDA margin came in at ₹ 501 crore and PAT was up 87% YOY at ₹ 248 crore. Soda Ash business saw volume growth of 27%.
  • From 1st Jan 2021 US government has reduce royalty on soda ash and sodium bicarbonate from 6% to 2% for 10years, which will improve margin of Tata chemical as 35% of their total revenue come from US.

  • Tata Chemical has solid balance sheet, it hold 50% stake in rallis India they have refinanced their debt which will reduce their interest payment by roughly 50 crore a year.


Tata Chemical one of the largest producer of soda ash, basic chemicals and specialty chemicals in India they also produce agro chemical and sell it through rallis India. In second quarter despite cost pressure company was able to protect its margin due to rise in volume and price increase, company is expanding its capacity from internal cash flow. Chemical Industry is expected to do very well because of china plus one policy and pick up in electric vehicles .On performance front we expect company to report EPS of Rs.43.7 for FY23E, at CMP of ₹943 PE works out to be 21.57x. Hence, investors can buy the stock at CMP of Rs.943 for target price of Rs.1115. Time frame should be 9-12months.

Source: Livemint, EWL Research

Key Products:


Soda Ash – Tata Chemical produces light soda ash using the ammonia soda process, company is the largest and most diversified soda ash company. They have manufacturing capacity in India, US, UK and Kenya that can supply soda ash across the globe, and have roughly 5.5 million tonne capacity.

Use of Soda Ash

1. In manufacturing glass as it reduces melting temperature of the sand use in glass formation which help in shaping glass articles such as tableware and float glass.

2. In detergent and soap to give smoother surface.

3. Production of chemicals like sodium bicarbonate, sodium silicate and sodium chromate.

4. In water treatment plant, effluent treatment, paper and pulp industry and drugs industry.

5. Soda Ash is use in the process of lithium batteries.

Sodium Bicarbonate: Tata Chemical is the sixth largest sodium Bicarbonate producer in the world, they are adding new value-added products through application development and formulations expanding current product with new ingredients so that they can generate better `a net zero carbon Sodium Bicarbonate manufacturer.


Use of Sodium Bicarbonate-

  1. 25 percent of the total amount of sodium bicarbonate utilized worldwide is used as an animal feed additive.

  2. Sodium Bicarbonate is use as a purifier in complex plastic and polymer.

  3. If we break sodium Bicarbonate then O2 is released which is use in rubber and plastic industry for shaping products.

  4. It destroy bacteria and fungi so use in pharma industry.

Salt: Salt is the oldest and core of the company, in February they have commissioned 200 crore plant and bought the annual capacity to 800000 tonnes in their Mithapur plant. In packaged iodized salt they have market share of 17.3%. Tata Chemical also produces industrial salt under the brand “MAGADI” Industrial salt, this is used in large number of industry.

Use of Industrial Salt:

  1. Production of soap and Batteries.
  2. Animal Feed Industry
  3. Bleaching wood pulp for paper production.
  4. Leather tanning
  5. Caustic and chlorine production.

Crop Protection and Seeds: Tata Chemicals sells its agri protection products through its subsidiary Rallis India, they cover wide range of products like fungicides insecticides, and herbicides. Through its Lithium- ion battery recycle plant it produces Manganese sulfate which increases leaf nutrient also use for base manure, soak seed, and in the sprinkling on blade face to increase crop production yield. Due to the indiscriminate use of irrigation water and fertilisers, a large part of India’s agricultural land has become degraded. The use of micro irrigation techniques and fertigation is the only way to manage these resources efficiently. Rallis has a range of specialist solutions which provide micro nutrients and growth inputs for a healthy crop.

Investments :
Quoted Shares
Company No of shares Price* Amount(in Crore)
The Indian Hotels 10689348 193 206.30
Orient Hotels Limited 2523000 39.2 9.89
Tata Investment Corporation Ltd 441015 1455.5 64.19
Tata Steel 3090051 1140 352.27
Tata motors Ltd 1966294 477 93.79
Titan company Limited 13826180 2350 3249.15
Total Quoted Investment 3975.59
Unquoted Investment 516.13
*Price as on 7-12-2021

Indian Chemical Industry : 

India and china has a very dominate position in the world chemical Industry. India has a large pool of scientists with a potential to steer the industry ahead to greater heights. Indian manufacturers have increased at a CAGR of 11% in revenue between FY15 and FY21, India’s share has increase in the global specialty chemicals market to 4% from 3%, according to the Crisil report.

Supply disruption in China and Europe are creating new opportunity for Indian chemical Industry, after covid global companies are also looking for new supplier which are outside China that has caused the global end-user industries to diversify their vendor base mainly towards Indian players. Closure of plants in the EU and China due to increasing environmental concerns have favoured Indian manufacturers to invest further in specialty chemicals.

The market size of Chemicals sector of India is around $178 billion; expected to grow to $300 Billion by FY2025.

In the chemical sector, Government has allowed 100% FDI and industrial licensing with exception to few hazardous chemicals. Government has also launched PLI scheme to attract new Investment in Chemical Industry Total FDI inflow in the chemicals sector reached around US$ 18.06 billion between April 2000 and September 2020.

Tata Chemical is the 3rd-largest Soda Ash player in the world. The Company has two business segments Basic Chemistry Products and Specialty Products catering to varied customer segments all around the world. Basic Chemistry Products mainly consist of sodium bicarbonate, soda ash, salt, etc. Company has divested all its non-core business and are now scaling up the core basic and specialty chemicals business. The operations in Basic Chemical segment are spread across India, the United States of America, United Kingdom and Kenya. It caters to customers in Glass, Detergent, Food and Pharma industry. Specialty products consists of specialty food ingredients such as Prebiotics, Formulations for Feed, Food and Pharma customers, Specialty Silica for Rubber/Tyre industry and Crop Care and Seeds for the Farm sector through its subsidiary, Rallis India Limited.

Source: globe newswire, Annual Report 

Q3FY21 Financial Performance – Consolidated

Particulars Q2FY22 Q1FY22 Q2FY21 YoY% QoQ%
Net Sales 3022.63 2977.24 2609.35 15.84 1.52
Other Income 134.21 105.02 78.97 69.95 27.79
Total Income 3156.84 3082.26 2688.32 17.43 2.42
Total Expenditure 2532.78 2376.01 2223.1 13.93 6.60
PBIDT 624.06 706.25 465.22 34.14 -11.64
Interest 83.81 81.21 83.63 0.22 3.20
PBDT 540.25 625.04 381.59 41.58 -13.57
Depreciation 199.94 197.45 192.43 3.9 1.26
PBT 340.31 427.59 189.16 79.91 -20.41
Tax 62.29 86.47 79.67 -21.81 -27.96
Deferred Tax 10 -1.21 -22.6 -144.25 -926.45
Reported Profit After Tax 268.02 342.33 132.09 102.91 -21.71
EPS 34.72 45.2 11.06 213.92 -23.19
Q2FY22 Q1FY22 Q2FY21 YoY(Bps) QoQ(Bps)
PBIDTM (%) 20.65 23.72 17.83 282 -307
PBDTM (%) 17.87 20.99 14.62 325 -312
PATM (%) 7.32 9.67 2.7 462 -235

Balance Sheet:

Particulars 2021 2020 2019
Share Capital 254.82 254.82 254.82
Reserves Total 14035.15 12642.84 12086.45
Total Shareholders Funds 14289.97 12897.66 12341.27
Minority Interest 852.6 763.77 2914.67
Secured Loans 3507.17 3261.96 2972.89
Unsecured Loans 3425.36 4440.41 3156.96
Total Debt 6932.53 7702.37 6129.85
Other Liabilities 1771.08 1903.12 1633.83
Total Liabilities 23846.18 23266.92 23019.62
Net Block 15261.03 15355.61 13550.99
Capital Work in Progress 1093.51 835.02 773.83
Investments 5815.82 4284.8 5615.27
Current Assets, Loans & Advances
Inventories 1686.56 1869.16 1725.58
Sundry Debtors 1396.99 1579.92 1452.5
Cash and Bank 1411.01 2079.52 1952.19
Loans and Advances 587.66 669.25 715.7
Total Current Assets 5082.22 6197.85 5845.97
Less : Current Liabilities and Provisions
Current Liabilities 2398.85 2511.05 2171.61
Provisions 520.06 472.84 416.51
Total Current Liabilities 2918.91 2983.89 2588.12
Net Current Assets 2163.31 3213.96 3257.85
Net Deferred Tax -1572.11 -1422.63 -1260.94
Other Assets 1084.62 1000.16 1082.62
Total Assets 23846.18 23266.92 23019.62
Contingent Liabilities 1141.05 1056.87 1023.23

Cash Flow Statement:

Particulars (₹ in Crores) 2021 2020 2019
Cash Flow Summary
Cash and Cash Equivalents at Beginning of the year 1254.26 1888.38 3945.93
Net Cash from Operating Activities 2037.3 1780.09 1581.29
Net Cash Used in Investing Activities -1146.57 -2284.95 -1927.01
Net Cash Used in Financing Activities -1455.65 -129.26 -1711.83
Net Inc/(Dec) in Cash and Cash Equivalent -564.92 -634.12 -2057.55
Cash and Cash Equivalents at End of the year 689.34 1254.26 1888.38

Key Financial Ratios:

2021 2020 2019
Key Ratios
Debt-Equity Ratio 0.54 0.55 0.52
Long Term Debt-Equity Ratio 0.33 0.34 0.44
Current Ratio 0.78 0.89 1.48
Turnover Ratios
   Fixed Assets 0.57 0.63 0.7
   Inventory 5.95 5.9 6.6
   Debtors 7.1 6.99 7.63
Total Asset Turnover Ratio 0.45 0.46 0.47
Interest Cover Ratio 2.73 22.69 5.02
PBIDTM (%) 16.66 79.47 22.27
PBITM (%) 9.47 73.19 16.87
PBDTM (%) 13.18 76.25 18.91
CPM (%) 11.31 74.18 16.72
APATM (%) 4.13 67.89 11.32
ROCE (%) 4.4 36.42 9.08
RONW (%) 3.21 57.03 10.17
Payout (%) 64.24 92.98 48.72
Debtors Turnover Ratio ( Days)
7.1 6.99 7.63
Inventory Turnover Ratio (Days)
5.95 5.9 6.6

Extract of Q2FY22 Earning:


  • Tata Chemical total revenue from operations rose 16% YoY to ₹3,023 crore in September Quarter. The consolidated operating profit increased 30% YoY to ₹ 501 crore during the December quarter. This improvement in company performance is because of better reliasation and volume growth.

  • During second quarter company reported strong profit growth of 87% YoY, Profit came in at ₹248 crore

  • Company saw robust volume growth in soda ash segment of 27%, in salt segment it was 5%, soda ash pricing has also improved in second quarter.

  • In FY2021, overall cash flow generation was ₹ 203.73 crore and free cash flow was ₹79.54 crore.

  • In second quarter despite the headwind company is able to maintain their margin as coal and freight prices has gone up 4x, gas prices has also gone up substantially.

  • EBITDA Margin of the company improved to 23% in Q2FY22 from 16% in Q2FY21.

  • Gross Debt as on 30th Sept 21 is ₹ 7,108 Cr vs ₹ 6,933 Cr as on Mar21.This increase in debt is due to capacity expansion.



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