Tata Chemicals shares slip 4% on first quarterly loss in nine years; what's next?

Shares of Tata Chemicals slipped over 4% in ealy deals on Tuesday after the Tata Group company reported its first quarterly loss in nine years. It posted a net loss of Rs 850 crore for the January–March 2024 quarter against a profit of Rs 709 crore in the year-ago period.

The company recognized a non-cash write-down of assets worth Rs 963 crore with respect to the UK (Lostock Plant), which has been disclosed as an exceptional loss. Revenue from operations slipped 21.1 percent year-on-year to Rs 3,475 crore for the quarter.

Tata Chemicals stock fell 4.44% to Rs 1050 against the close of Rs 1099 in the previous trading session.

The stock has climbed 12.41% in a year but fallen 4.21% in 2024. Total 1.41 lakh shares of the firm changed hands amounting to a turnover of Rs 15.01 crore on BSE. Market cap of the firm fell to Rs 27,289 crore on Tuesday.              

In terms of technicals, the relative strength index (RSI) of the stock stands at 48.9, signaling the stock is neither oversold nor overbought. Tata Chemicals has a one-year beta of 0.7, indicating very low volatility during the period. Tata Chemicals shares are trading lower than the 5 day, 20 day, 50 day but higher than the 100 day, 150 day and 200 day moving averages.  

The soda ash manufacturer's revenue fell 21.1 percent to Rs 3,475 crore in the fourth quarter, in comparison with Rs 4,407 crore in the year-ago period.

The impairment is primarily due to unfavourable market conditions and reduced demand for soda ash in Europe and the persistently low pricing outlook in the jurisdiction based on which the cash flow projections have been revised downward, the company said. This impairment of Rs 963 crore represents the non-cash write down of the cash generating unit comprising property, plant and equipment of Rs 821 crore, capital work-in-progress of Rs 122 crore, Right-of-use assets of Rs 4 crore and other assets (net) of Rs 16 crore, relating to the UK Group operations, Tata Chemicals added.

Motilal Oswal said operating performance of the Tata Group firm missed its expectations. It assigned a price target of Rs 980 with a neutral rating.

"Tata Chemicals (TTCH)’s 4QFY24 consolidated EBITDA declined 54% YoY, primarily due to a subdued operating performance across geographies with India/US/UK/Kenya reporting 26%/68%/72%/57% decline YoY. We broadly maintain our FY25/FY26 EBITDA estimates and reiterate our Neutral rating with an SoTP-based TP of Rs 980," said Motilal Oswal.