Tata Chemical tanks after Tata Sons IPO casts doubt

Tata Chemicals' stock price witnessed a sharp decline on Monday, plunging about 11% in early trading.

Shares of Tata Chemicals were trading at Rs 1185, reflecting a drop of 9.88% from its previous closing price. It hit a low of Rs 1172.50 in early trade.

This correction comes after a surge of about 40% in the stock price in the past six session.

Market analysts attribute the sudden reversal to media reports suggesting the potential postponement or cancellation of the much-anticipated Tata Sons IPO. This news triggered a correction wave across Tata Group companies, including Tata Consumer and Tata Motors.

Adding to the pressure, a domestic broker reiterated its "sell" rating on Tata Chemicals, with a target price of Rs 780, about 35% lower than the current market price. The brokerage cited the uncertain outlook for the soda ash industry, particularly with continued low import prices and the impact of recent contract renegotiations. The influx of new soda ash capacities, especially from China, further intensifies the competitive landscape.

Further, the delay in the Tata Sons IPO throws a wrench into plans for Tata Chemicals to unlock value from its stake in the holding company. The market anticipated the IPO to unlock significant value for Tata Chemicals shareholders.

Tata Chemicals is a prominent supplier in various sectors including glass, detergent, industrial, and chemical, with a solid position in the crop protection business through its subsidiary, Rallis India.

The company reported a 55.09% decline in consolidated net profit from continuing operations to Rs 194 crore in Q3 FY24, with revenue from operations at Rs 3,730 crore, down 10.07% from the previous year due to lower volumes in soda ash and pricing pressure in all regions.

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