Tata Chemicals witnessed a significant surge of around 8 percent in morning trading on March 7, reaching a 52-week high of Rs 1,271.15, marking its sixth consecutive session of gains.
The stock has been on an upward trajectory since March 1, following the announcement that Fitch Ratings affirmed its Long Term Foreign Currency Issuer Default Rating (IDR) at BB+ and revised the outlook to “stable” from “positive”.
As of 9:49 am, Tata Chemicals was trading 7.6 percent higher at Rs 1,269 on the National Stock Exchange (NSE).
Over the past five sessions, the stock has rallied by 33 percent. In the past year, Tata Chemicals has gained 25 percent, mirroring the performance of the benchmark Nifty. Analysts note that the rapid rise in the stock price has attracted attention from investors.
However, Jigar S Patel of Anand Rathi Shares & Stock Brokers advises caution, pointing out significant resistance around Rs 1,200-1,205. Patel suggests refraining from initiating fresh long positions at this juncture and recommends existing investors to consider booking profits and adopting a wait-and-see approach.
For the quarter ended December 2023, Tata Chemicals reported a 60 percent year-on-year drop in net profit at Rs 158 crore, attributed to tepid demand across key regions and segments. The company’s revenue also fell by more than 10 percent to Rs 3,730 crore.
Tata Chemicals is the world’s third-largest soda ash producer. Fitch Ratings expects the company’s Ebitda (earnings before interest, taxes, depreciation, and amortisation) net leverage to average 2.2x over FY25-FY27, driving the “stable” outlook despite near-term industry pressures.
Fitch Ratings anticipates margin improvement to 17 percent from FY26, supported by a gradual demand recovery, supply tightening, and lower energy costs. However, the agency warns that prolonged unfavorable economic conditions and supply glut in the industry could limit margin improvement.
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