At a Glance
Tata Chemicals was once the crown jewel of the Tata Group’s industrial portfolio — world’s 3rd largest soda ash producer, one of India’s oldest chemical giants. But now? It’s posting losses, ROE has dipped to 1%, and the stock is down 19% YoY. Is this a bargain… or a bagholder’s chemical romance?
🧪 1. Business Breakdown: What Do They Actually Do?
Tata Chemicals has two major segments:
- Basic Chemistry Products (🧂 Soda Ash, Sodium Bicarbonate, Salt, Cement, Caustic Soda)
- Specialty Products (🔬 Nutritional Ingredients, Agro-Chem via Rallis India)
🧂 Fun Fact: They’re the 3rd largest soda ash player globally, with low-cost natural soda ash assets in the US and Kenya.
🇮🇳 In India, they operate under the brands:
- Tata Salt (biggest branded salt)
- Rallis India (Agrochem subsidiary)
- Tata Nx (health/nutraceuticals)
📉 2. The Great Decline: FY21-FY25 Financials
| ₹ in Cr | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | 10,200 | 12,622 | 16,789 | 15,421 | 14,887 |
| EBITDA | 1,506 | 2,305 | 3,820 | 2,847 | 1,953 |
| Net Profit | 436 | 1,405 | 2,434 | 435 | 387 |
| ROCE (%) | 4% | 8% | 12% | 8% | 4% |
| ROE (%) | 5% | 5% | 11% | 4% | 1% |
| EPS (₹) | 10.06 | 49.37 | 90.93 | 10.52 | 9.22 |
📉 FY25 profit is down 84% from FY23 peak
⚠️ OPM has fallen from 23% → 13% in 2 years
🧪 3. What Went Wrong?
- 📉 Soda Ash Prices Crashed: Global overcapacity + Chinese slowdown
- 💸 Operating Costs Rose: Energy inflation hurt margins
- 🧂 Agri Biz Weakness: Rallis India is struggling with erratic monsoons + regulatory headwinds
- 🧾 Inventory Pile-Up: High inventory days (324) & soft demand = margin pressure
- 💰 Other Income Volatility: Swings due to FX + one-offs killed consistency
🧠 4. Valuation vs Peers
| Company | Mcap (₹ Cr) | P/E | ROCE | Comments |
|---|---|---|---|---|
| Tata Chemicals | 23,281 | 88x 😬 | 4% | Loss in recent quarters, ROE collapsed |
| GHCL | 5,495 | 8.8x ✅ | 25% | Lean, soda ash focused |
| Deepak Fert | 19,368 | 20.8x | 16% | Agri + Industrial Chemicals |
| GNFC | 7,683 | 12.9x | 9.6% | Better profitability + payout |
| Chemplast Sanmar | 6,543 | — | 1.8% | Also struggling |
💣 At 88x P/E, Tata Chem is NOT cheap — it’s comically overpriced vs peers.
🧾 5. FY25 Quarterly Breakdown
| Quarter | Revenue | Net Profit | OPM | EPS |
|---|---|---|---|---|
| Jun 23 | ₹4,218 Cr | ₹587 Cr | 25% | ₹20.88 |
| Sep 23 | ₹3,998 Cr | ₹495 Cr | 20% | ₹16.80 |
| Dec 23 | ₹3,730 Cr | ₹194 Cr | 15% | ₹6.20 |
| Mar 24 | ₹3,475 Cr | -₹841 Cr | 13% | -₹33.36 |
| Jun 24 | ₹3,789 Cr | ₹190 Cr | 15% | ₹5.89 |
| Mar 25 | ₹3,509 Cr | -₹49 Cr | 9% | -₹2.20 |
📉 OPM went from 25% → 9% in 6 quarters.
😐 Net profit negative in 2 of last 5 quarters.
💸 6. Fair Value Estimate
Let’s assume FY26 recovery with ₹800 Cr profit and ~₹32 EPS (optimistic, given FY25 was ₹9.22)
| Basis | P/E | FV |
|---|---|---|
| Bear Case | 15x | ₹480 |
| Base Case | 20x | ₹640 |
| Bull Case | 25x | ₹800 |
🎯 Fair Value Range: ₹480 – ₹800
(Current Price: ₹914 = overpriced in all scenarios)
⚠️ 7. Red Flags & Risks
🚩 High P/E despite falling profits
🚩 ROE at 1% — even FD beats that
🚩 Earnings volatility due to other income + agri business
🚩 Global soda ash pricing pressures
🚩 No clear specialty chemicals scale-up yet (just buzzwords)
🌱 8. But What About the Green Future?
Tata Chem had once teased:
- 🧪 Battery-grade lithium carbonate ambitions
- 🔋 EV cell material exploration
- ♻️ Circular chemistry goals in sustainability reports
But as of FY25, no material revenue from these “future bets”.
So far: more pitch decks, less profit.
🧂 EduTake: Salted Out?
Tata Chemicals is iconic, sure.
But investors don’t buy legacy — they buy earnings.
Right now:
- Specialty biz is microscopic
- Core soda ash is hurting
- Margins are melting
- Valuation is bloated
It needs a true turnaround. Otherwise, this stock may remain a “sodium hyped rate” story. 🧂
✍️ Written by Prashant | 📅 June 22, 2025
Tags: Tata Chemicals, soda ash, Rallis India, Tata Group stocks, commodity crash, specialty chemicals, FY25 results, undervalued chemical stocks, chemical industry analysis
