Tata Chemicals tumbles after Q4 PAT drops 85% YoY

Tata Chemicals slumped 6.88% to Rs 729 after the company reported 85% drop in consolidated net profit to Rs 29 crore on a 11% rise in income from operations to Rs 2,636 crore in Q4 FY21 over Q4 FY20.

EBITDA declined by 29% to Rs 283 crore in Q4 March 2021 from Rs 400 crore in Q4 March 2020. EBITDA margin was at 11% as on 31 March 2021 as against 17% as on 31 March 2020.

Effective working capital management lead to strong cash flow from operations i.e. Rs 2,037 crore in Q4 FY21 as against Rs 1,780 crore in Q4 FY20.

There was a Rs 45 crore one-off impact in US operations due to spike in energy prices due to Polar Vortex.

UK operations also had one offs i.e. tax asset write off Rs 16.5 crore and Rs 7.5 crore refinance cost & impact due to floods.

The company said it expects demand of soda ash and related products in North America, UK and Kenya to continue to sequentially improve in 2021-22.

In the US, while contract prices for calendar year are lower, export spot prices are seeing positive movement. Plant capacity utilization remains high in Q4 with stabilization in demand.

The company reported 58% fall in net profit to Rs 436 crore on 1.5% drop in income from operations to Rs 10,200 crore in the year ended 31 March 2021 over the year ended 31 March 2020.

Commenting on the results, R. Mukundan, managing director & CEO, Tata Chemicals, said, During the year, we witnessed a sequential improvement in demand and this quarter saw continuation of the same trend. With the second wave of COVID-19, our priority will be the health and safety of our stakeholders and we are undertaking several initiatives to cater to the well-being of the employees and communities.

During the quarter, our profits were muted due to one off in US operations caused by Polar Vortex leading to sharp rise in gas prices. There was one off in UK operations due to tax asset write off, re-financing cost. We are witnessing strengthening of Spot soda ash prices which will ease margin pressures sequentially in the coming quarters.

Going forward, time bound commissioning of capacities in Mithapur and Dahej coupled with growth of Specialty products are critical steps towards transformation of the company.

Tata Chemicals is a global company with interests in businesses that focus on basic chemistry products and specialty chemistry products.

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