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Tata Chem: Suspension of Haldia Operations Drag Bottomline Lower - Views on News from Equitymaster
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  • Aug 17, 2017 - Tata Chem: Suspension of Haldia Operations Drag Bottomline Lower

Tata Chem: Suspension of Haldia Operations Drag Bottomline Lower
Aug 17, 2017

Tata Chemicals has announced its first quarter results for the financial year 2017-2018 (1QFY18). The company has reported a 19.6% YoY fall in topline and a 13.7% YoY fall in bottomline during the quarter.

Performance summary
  • Total income from operations during 1QFY18 fell by 19.6% YoY. Most of the decline here was seen on the back of poor performance of the fertilizer and other business segments of the company, where revenues fell by 76.0% YoY and 81.0% YoY respectively.
  • Operating profit (EBITDA) in 1QFY18 fell by 22.6% YoY mainly due to loss in fertilizer business and lower profitability in chemicals business. Operating margins stood at 17% in 1QFY18 as against 17.6% in 1QFY17.
  • A more than four-fold jump in exceptional income helped limit the bottom line loss to 14% YoY
  • Net profit margins improved marginally and stood at 6.7% during 1QFY18 as compared to 6.3% in 1QFY17.

    Consolidated financial snapshot
    (Rs m) 1QFY17 1QFY18 Change
    Net sales 32,955 26,486 -19.6%
    Expenditure 27,146 21,988 -19.0%
    Operating Profit (EBITDA) 5,809 4,498 -22.6%
    EBDITA Margin (%) 17.6% 17.0%  
    Depreciation 1,321 1,317 -0.3%
    Finance Cost 1,091 916 -16.1%
    Other Income 446 187 -58.0%
    Profit before tax 3,843 2,453 -36.2%
    Exceptional Items 84 384 359.8%
    Tax 1,018 624 -38.6%
    Profit after tax/(loss) 2,909 2,212 -24.0%
    Minority Interest 734 639 -13.0%
    Share of Associates -113 205  
    Net profit after minority interest 2,062 1,779 -13.7%
    Net profit margin (%) 6.3% 6.7%  
    No. of shares (m)   254.8  
    Diluted earnings per share (Rs)*   37.9  
    P/E ratio (x) *   15.5  
    *Based on trailing 12 month earnings
  • On the segmental front, the company witnessed disruptions in some of its businesses during the quarter.
  • The fertilizer business saw significant loss of production as the company had to keep its Haldia plant closed during the entire quarter. This was done to relocate the ammonia pipeline in accordance with the order issued by the Central Pollution Control Board.
  • Revenues for the chemicals segment also suffered due to lower soda ash volumes. Most of the decline here came on account of fire incident at Lostock facility for the European business.
  • The consumer business of the company was also impacted due to lower volumes during the quarter. However, the fall here was partly offset by lower marketing spend.

    Segmental Performance
    Segment 1QFY17 1QFY18 Change
    Inorganic Chemicals      
    Revenues 22,036 20,479 -7.1%
    PBIT 4,017 3,369 -16.1%
    PBIT margin 18.2% 16.5%  
    Fertilisers      
    Revenues 4,044 969 -76.0%
    PBIT 187 -236  
    PBIT margin 4.6% -24.3%  
    Other agri inputs      
    Revenues 5,828 4,824 -17.2%
    PBIT 1,032 555 -46.3%
    PBIT margin 17.7% 11.5%  
    Others      
    Revenues 1,161 221 -81.0%
    PBIT -100 -116  
    PBIT margin -8.6% -52.5%  
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