JM Financial starts coverage with 'Add' on Tata Chemicals; stock rises 3%

Domestic brokerage JM Financial has initiated coverage on Tata Chemicals Limited (TCL) with an ‘Add’ rating and set a target price of ₹970 per share for September 2026, citing the company’s strong growth prospects in its soda ash business and strategic operational moves.

 

On the bourses, Tata Chemicals share price rose as much as 3.15 per cent to an intraday high of ₹931.50 per share. However, by 10:20 AM, Tata Chemicals shares were off day’s high, but continued to trade 0.82 per cent higher at ₹910.40. In comparison, BSE Sensex was trading 0.33 per cent lower at 82,224.84 levels.

 

 

Tata Chemicals, a part of the Tata Group and incorporated in 1939, is a global chemicals leader operating across four continents with 15 manufacturing facilities and 176 patents. The company serves a wide array of industries, including glass, detergents, food, tyres, and nutraceuticals. Its product portfolio spans basic chemicals such as soda ash, sodium bicarbonate, and salt, as well as specialty products including agrochemicals, specialty silica, and prebiotics. 

 

TCL is the “third-largest soda ash producer globally (ex-China), the fifth-largest sodium bicarbonate producer globally,” and a leading salt producer in India and the UK. The company also holds a 55 per cent stake in Rallis India and has a joint venture, ALCAD, with Church & Dwight Co.

 

JM Financial expects growth to be primarily driven by a recovery in the soda ash business. “Tata Chemicals is set to benefit from a likely improvement in the overall soda ash demand-supply balance and price recovery,” the brokerage noted, adding that new-age applications such as EV batteries and solar cell glass, along with industry-wide capacity rationalisation, will further support growth. 

 

Margin expansion is expected from cost optimisation measures, including the closure of the inefficient Lostock unit in the UK, and the ramp-up of newly commissioned soda ash and bicarbonate capacities in India, along with a new pharma-grade bicarbonate facility in the UK.

 

Analysts project consolidated revenue, Ebitda, and PAT to grow at CAGRs of ~5 per cent, 17 per cent, and 73 per cent respectively over FY25-28. Consolidated revenue is expected to reach ₹17,300 crore by FY28, while Ebitda margin is anticipated to expand from ~13.1 per cent in FY25 to ~18 per cent in FY28. PAT, after minority interest, is projected to rise sharply from ~₹240 crore in FY25 to ~₹1,210 crore in FY28, driven by positive operating leverage and a turnaround in UK operations.

 

Despite these promising growth drivers, JM Financial cautioned on potential risks, including “underwhelming ramp-up of new capacities, slower-than-expected recovery in the global soda ash market, and less-than-expected improvement in margins.”

 

While Tata Chemicals is well-positioned to benefit from capacity ramp-ups, improved realisations, and margin expansions, JM Financial noted that much of the anticipated earnings recovery is already reflected in the current stock price. “We initiate coverage with an ‘Add’ rating and a Sep’26 SOTP-based target of ₹970 per share, implying ~10x Sep’27E EV/Ebitda,” the brokerage said.