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 Chem: Restructuring paying off - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 7, 2001

    Tata Chem: Restructuring paying off

    A massive restructuring exercise undertaken by Tata Chemicals (TCL) last year seems to be yielding results for the company. The restructuring included a massive 25% reduction in its workforce, a conscious decision to exit non-core areas, a detailed plan to prune costs and a renewed focus towards marketing and brand building.

    The revenue mix of the company is now skewed towards Soda Ash with a contribution of more than 40% coming from this business. After a free fall last year, due to Chinese dumping soda ash prices have shown a firm uptrend. Tata Chemicals is re-organizing every aspect of this business to improve efficiency. The company has set for itself a target to become the lowest cost soda ash producer in the world over the next three years. The company plans to cut costs by at least US $ 20-22/ tonne by various cost cutting measures. This is around 8-9% of the current International soda ash prices.

    In the salt business, though the company was a pioneer in branded salts, it is having a tough time maintaining its leadership position due to competition from HLL. Besides a strong marketing push in the domestic market, Tata Chemicals is eyeing export opportunities in the Middle East. The urea business, though not lucrative, remains a cash cow for the company. The company remains one of the most efficient producers of Urea.

    TCL plans to exit all non-core areas of businesses viz, cements and detergents. As far as detergents business is concerned there is a MoU with Jyothi Labs, though the sale price has not been decided. The cement business with a clinker capacity of 0.3 m tonnes is also up for sale. Armed with huge operational cash flows and expected cash flow from sale of non-core businesses, TCL plans to get aggressive on the in-organic growth front.

    The current year would also see a major change in the capital structure of the company. First, it plans to re-pay / swap high cost debt in its books. Further, the company recently acquired shareholder approval to buyback 15% of its share capital from open market purchases.

    Assuming that the buyback of the company goes through in the current year, the stock trades at 4x our expected earnings for FY02. Tata chemicals has paid an average of dividend of Rs 5.5 in last ten years with an average dividend yield in the range of 11-15%.

     

     

    Equitymaster requests your view! Post a comment on "Tata Chem: Restructuring paying off". Click here!

      
     

    More Views on News

    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.

    Tata Chemicals: Consolidated profits down substantially (Quarterly Results Update - Detailed)

    Mar 2, 2016

    Tata Chemicals has reported consolidated topline fall of 4% YoY while the bottom line has fallen 45% YoY

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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 17, 2017 09:54 AM

    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 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE TATA CHEMICALS WITH

    MARKET STATS