X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Tata Chemicals: Going strong - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 29, 2003

    Tata Chemicals: Going strong

    Tata Chemicals (TCL) announced its 2QFY04 results yesterday. Buoyed by a revival in fertilizer demand and improved financial management, the company has reported a 16% growth in topline and an impressive 71% rise in bottomline. For 1HFY04, TCL has registered a 6% rise in net sales and a 59% growth in net profit. In this context, let us briefly evaluate the company’s performance.

    Results at a glance…
    (Rs m) 2QFY03 2QFY04 Change 1HFY03 1HFY04 Change
    Net Sales 4,175 4,830 15.7% 7,441 7,909 6.3%
    Other Income 99 279 180.7% 303 422 39.3%
    Expenditure 2,922 3,444 17.8% 5,230 5,406 3.4%
    Operating Profit (EBDIT) 1,253 1,386 10.6% 2,212 2,503 13.2%
    Operating Profit Margin (%) 30.0% 28.7%   29.7% 31.6%  
    Interest 248 114 -54.0% 507 250 -50.7%
    Depreciation 339 334 -1.6% 679 668 -1.6%
    Profit before Tax 765 1217 59.1% 1,329 2,007 51.0%
    Extraordinary income (expense) (35) (38)   (70) (113)  
    Tax 259 374 44.2% 449 604 34.5%
    Profit after Tax/(Loss) 470 805 71.2% 810 1,291 59.2%
    Net profit margin (%) 11.3% 16.7%   10.9% 16.3%  
    No. of Shares (m) 180.7 180.7   180.7 180.7  
    Earnings per share (Rs)* 10.4 17.8   9.0 14.3  
    P/E (x)   6.6     8.3  
    (*Annualised)            

    TCL’s topline growth during 2QFY04 was fuelled by a 29% growth in the fertilizer division. Good monsoons have resulted in an increase in the fertilizer demand. As the fertilizer sales volumes increased 14%, it is apparent that TCL has been able to get higher realizations during the period. The company’s Babrala plant continues to be the most efficient plant in the country. TCL is hence expected to benefit from the group concession scheme of urea pricing as it is expected to reward efficient manufacturers.

    In the inorganic chemicals division, soda ash volumes increased 3%. The total glass-manufacturing customers (key consumer industry of soda ash) increased 18% during the quarter. On the exports front, TCL continued with its strong performance selling 36,000 MT of soda ash. On the domestic front, the company has retained its leadership position with a market share of 34% in this segment. In the salt segment, ‘Tata Salt’ continues to be the market leader with a 38% share. ‘Samundar’ crystal salt is also seeing a steady increase in demand.

    On the operations front, an increase in the raw material, power and fuel cost have put pressure on the operating profit margins. However, drop in operating profit margin was offset by a sharp increase in other income and a drop in interest cost. Consequently, TCL saw a 540 basis point increase in net margins. The other income growth was due to the company receiving interest on tax refund. However, the biggest positive for TCL was the drop in the interest costs. The financial management initiatives undertaken by the company have resulted in a 33% reduction in debt to Rs 6.2 bn. TCL’s debt to equity ratio now stands at 0.36.

    Going forward, TCL is planning to enhance its fertilizer capacity. The company is also considering inorganic growth opportunities for increasing its fertilizer capacity. We believe that in view of the good monsoons and a consequent rise in urea demand and the implementation of the long-term fertilizer policy, TCL is likely to be a major beneficiary. In the soda ash business, TCL is planning to focus on international markets and also enhance existing relations with key customers. As for the salt business, TCL plans to expand this segment by introducing variants.

    The scheme of amalgamation of TCL with Hind Lever Chemicals received shareholders approval on 25th July ’03 and was subsequently approved by The Mumbai High Court. However, the amalgamation will come into effect only after The Punjab and Haryana High Court approves the same. The merger is expected to result in an increase in market share for the company.

    At Rs 113, TCL is trading at a P/E of 8x annualised 1HFY04 earnings. While there exist tremendous growth potential in the fertilizer segment in the long run, the company continues to face intense competition in the soda ash segment. The financial management initiatives undertaken by the company are expected to ensure good bottomline growth going forward. However, we would like to caution the investors that urea (fertilizer segment) continues to depend upon the vagaries of monsoon and government regulations.

     

     

    Equitymaster requests your view! Post a comment on "Tata Chemicals: Going strong". Click here!

      
     

    More Views on News

    Tata Chem: Suspension of Haldia Operations Drag Bottomline Lower (Quarterly Results Update - Detailed)

    Aug 17, 2017

    Interruption at Haldia plant and fire at Lostock facility hits operations during the quarter.

    Tata Chemicals: Lower Finance Costs Boost Profits (Quarterly Results Update - Detailed)

    Jun 2, 2017

    Tata Chemicals registers 54.2% YoY rise in net profits during fourth quarter of FY17 on the back of lower finance costs and rise in other income.

    Tata Chemicals: Urea division dampens performance (Quarterly Results Update - Detailed)

    Nov 18, 2016

    Tata Chemicals has reported consolidated topline fall of 17% YoY while the bottomline has fallen 5% YoY

    Tata Chemicals: Operating margins catalyze strong profit growth (Quarterly Results Update - Detailed)

    Aug 18, 2016

    Tata Chemicals has reported consolidated topline fall of 9% YoY while the bottomline has grown 40% YoY.

    Tata Chemicals: Ends the year on a good note (Quarterly Results Update - Detailed)

    Jun 8, 2016

    Tata Chemicals reported consolidated topline growth of 7% YoY while the bottom line stood at Rs 2.4 bn as opposed to a loss during same quarter last year.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    TATA CHEMICALS SHARE PRICE


    Aug 22, 2017 03:36 PM

    TRACK TATA CHEMICALS

    • Track your investment in TATA CHEMICALS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON TATA CHEMICALS

    TATA CHEMICALS 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE TATA CHEMICALS WITH

    MARKET STATS