Tata Chemicals is a part of US$ 113 billion Tata Group, a globally leading multinational company employing over 4,600 people and present in 40+ countries with the existence of more than eight decades. It is engaged in the manufacture of inorganic chemistry products with plants spread across four continents – America, Europe, Africa and Asia. They are world’s third-largest Soda Ash and India’s leading vacuum evaporated iodised salt producer. They produce soda ash using synthetic and natural mining process. Of this, 3/4th capacity consists of natural soda ash allowing them significant cost competitiveness.
- 3rd largest Soda Ash manufacturer (globally)
- 6th largest Sodium bicarbonate manufacturer (globally)
- 13 million Farmer contacts (India)
- Top 25 Ranked amongst top 25 India’s Most Innovative Companies in 2019
- Pioneer In FOS/GOS products
Mr R. Mukundan Managing Director & CEO – An engineer from IIT Roorkee, he joined the Tata Administrative Service in 1990, after completion of MBA from FMS, Delhi University. He is also an alumnus of the Harvard Business School. He has extensive experience in the field of strategy, business development, manufacturing and general management. During his 30 year career with the Tata Group, he has held various responsibilities across the chemical, automotive and hospitality sectors of the group. He serves on executive committees of various industry forums.
Top 5 products & its applications
1. Soda Ash – Light > Detergent, Sodium Bicarbonate, Sodium Silicates, other chemicals, dyes and intermediaries
2. Soda Ash – Dense > construction and housing, automotive sector, silicates, – soft drinks, spirits, pharmaceuticals, tableware, glass
3. Bicarb > Pharma (US/British/Indian Pharmacopoeia), Food, Animal and poultry feed, Food grade dust, Explosion suppressant, Haemodialysis, Flue Gas Treatment
4. Salt [IVSD] > Food Processing, industrial salt, de-icing, dairy products, water softening and industrial applications
5. Cement > Construction, Pre-cast Pipes, Blocks, etc.
Points support BUY decision
1. Low PE ratio as compared to the industry median
2. Promoters increasing shareholding
3. Strong Annual EPS Growth
4. Growth in Net Profit with increasing Profit Margin (QoQ)
5. Company with Low Debt
6. Company with Zero Promoter Pledge
Points DON’T support BUY decision
1. Decreasing cash flow from operating activity
2. Decreasing operating margin
3. Decreasing ROCE
4. Substantial decrease in 3 Yr CAGR Net Profit (%)
5. Decrease in EBIT (YoY)
Cash generation capacity
Looking at overall past financial trend and other points one can hold his investment decision for a few more years to see some strong financial performance. Low PE ratio indicates, the share is undervalued but long term investment decision solely based on PE ratio ignoring financial performance may need reconsideration.
Disclaimer – This is my personal view and may be used only as a supporting for your study only after evaluation of the facts from the base information.