Tata Chemicals turns ex-date for spin off; opens at Rs 315 per share

Shares of Tata Chemicals climbed 8 per cent to Rs 340, bouncing back 13 per cent from its day’s low of Rs 301 on the BSE on Wednesday. With effect from today, the stock started trading on the bourses without food business. It opened at Rs 315 on the BSE and the National Stock Exchange (NSE), against its Tuesday’s closing price of Rs 724.

Tata Chemicals has fixed Thursday, March 5, 2020 as the record date, for the purpose of determining the shareholders of the Company to whom equity shares of Tata Consumer Products (TCPL) shall be issued in consideration for the demerger of the consumer products business of the Company into TCPL.

At 10:27 am, the stock of Tata Chemicals was trading 1 per cent lower at Rs 312, while Tata Consumer Products was down 1.5 per cent at Rs 350 on the BSE. In comparison, the S&P BSE Sensex was down 0.30 per cent at 38,509 points.

In May last year, Tata Group had decided to demerge consumer business of Tata Chemicals and merge it with Tata Consumer Products (formerly Tata Global Beverages).

Under the scheme, every shareholder of Tata Chemicals will get 1.14 new equity shares of Tata Global Beverages for every one equity share held in Tata Chemicals. It means that shareholders having 100 shares in Tata Chemicals will receive 114 shares in Tata Global Beverages.

The management said the combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods & beverages market with a broader exposure to the attractive and fast growing FMCG sector.

Tata Chemicals shareholders will retain their ownership of a focused science-led chemistry solutions and specialty products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth.

The strong growth visibility from cathode active material and Tata Chemical’s position in the entire chemistry would put the company in a favourable position in the long run.

“Tata Chemical has been coming up with capacity expansion for soda ash, soda bicarb and cement business, which is expected to get entirely commissioned by the end of FY22. Since the demand/supply dynamics are not expected to surprise in a meaningful way going ahead, thus we expect realisation/tonne to remain stable across geographies,” analysts at ICICI Securities had said in a Q3FY20 result update.