This Tata group stock rallies 11% post Q4; here’s why

Tata Chemicals shares surged over 11% in an otherwise weak broader market on Monday after the Tata group company reported a multi-fold jump in its consolidated profit for the fourth quarter ended March 31, 2022. Tata Chemicals, one of the largest chemical companies in India, reported consolidated profit at ₹470.24 crore in March quarter of 2022, compared to ₹29.26 crore in the year-ago period.

Boosted by strong earnings, shares of Tata Chemicals opened with a gain of 2.29% at ₹962.30 apiece on the BSE today, against the previous closing levels of ₹940.75. During the day’s trade so far, the stock surged as much as 11.4% to hit an intraday high of ₹1,047.75. In comparision, the BSE benchmark Sensex was trading 212 points lower at 56,846. The stock trades 10% lower than its 52-week high of ₹1,158 touched on October 18, 2021. The stock hit a 52-week low of ₹670.55 on May 6, 2021.

On the volume front, there was a surge in volume as 5.75 lakh shares worth ₹58.95 crore changed hands over the counter as compared to two-week average volume of 0.42 lakh stocks. The market capitalisation of the largecap stock surged to ₹26,201.7 crore.

The chemical stock currently trades higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. It has gained over 8% in a week, 2.5% in a month, and 12.3% since the beginning of the calendar year 2022. The Tata group share has delivered 31% returns to its shareholders in the past one year, while it has risen 13% over a six-month period.

In a regulatory filing on April 30, the chemical major said its consolidated income from operations rose 32% to ₹3,481 crore in Q4 FY22, from ₹2,636 crore in the year-ago period.

For the full financial year 2021-22, Tata Chemicals registered a consolidated profit after tax of ₹1,400 crore, up 221% from ₹436 crore in the corresponding period last year. The income from operations grew 23.74% to ₹12,622 crore as against ₹10,200 crore in FY21.

Tata Chemicals’ Managing Director and CEO R Mukundan said the global demand for its products and their applications continue to be positive, but the supply side environment, especially energy and input costs remain high along with logistic challenges that continue to be seen in the market, as per PTI report.

He said the key focus of the company is to ensure sustained and consistent volume deliveries to customers by leveraging digitalisation and sustainability. "In addition to operational excellence, we continue to focus on executing the Phase I growth capex in India. The company has further planned for Phase II capacity expansion of soda ash (300 kilo tonnes) and bicarb (70 kt) and specialty silica capacity by 50 kt for a capex outlay of ₹2,000 crore in India," he added.

Formed in 1939, Tata Chemicals is one of the largest chemical companies in India with operations in India, Europe, North America and Africa. It manufactures soda ash and related chemicals, including sodium bicarbonate, caustic soda and bromides. The company’s subsidiary, Rallis, is one of the leading players in the domestic crop protection sector, and manufactures pesticides, herbicides and fungicides at its factories in four locations.