Shares of Tata Chemicals slipped 8 per cent to Rs 721.85 on the BSE in intra-day trade on Tuesday after the company posted a disappointing operational performance.
For the January-March quarter of the financial year 2020-21 (Q4FY21), the company’s earnings before interest, taxes, depreciation, and amortization (Ebitda) margins declined 610 basis points (bps) to 10.7 per cent mainly due to lower gross margins, higher other expenditure and Rs 45 crore one-off expense in US operations caused by Polar Vortex leading to a sharp rise in gas prices.
Overall margins of India operations were marginally impacted due to lower sales realisation despite improved sale volumes across the product portfolio. US operation margins were impacted due to higher fuel price on account of the Polar Vortex, which hit the USA during last the month of the quarter. Overall, UK operation remained steady, but margins were impacted due to lower sales realisation, higher freight costs and higher plant spending due to flooding in January, Tata Chemicals said.
In Q4FY21, the company’s revenues grew 11 per cent year-on-year (YoY) to Rs 2,636 crore mainly due to 38 per cent YoY growth to Rs 520 crore in speciality product. The basic chemical segment revenues grew 6 per cent YoY to Rs 2,111 crore. The profit after tax (PAT) declined 94 per cent YoY to Rs 11.8 crore amid lower operational performance and one-off in UK operations due to Rs 16.5 core of tax asset write off and Rs 7.5 crore of refinancing cost and impact of floods.
The management said during the quarter, the company’s profit was muted due to a one-off in US operations caused by Polar Vortex leading to a sharp rise in gas prices. There was a one-off in UK operations due to tax asset write off and re-financing cost. We are witnessing the 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 the growth of Specialty products are critical steps towards the transformation of the company, the management said.
At 11:06 am, the stock was trading 6 per cent lower at Rs 733 on the BSE, as compared to a 0.27 per cent rise in the S&P BSE Sensex. The trading volumes on the counter nearly doubled with a combined 10.5 million equity shares having changed hands on the NSE and BSE.