Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
5Activity
0 of .
Results for:
No results containing your search query
P. 1
Buy Tata Chemicals

Buy Tata Chemicals

Ratings: (0)|Views: 322 |Likes:
Published by Sovid Gupta

More info:

Published by: Sovid Gupta on Jun 25, 2009
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

08/17/2011

pdf

text

original

 
Fairwealth SecuritiesPage 1
India
Fertilizers
Priced on 12
th
JUNE, 2009
±% potential
+50%
Market Data
Beta 0.890352Wk hi/lo 375.50/99.70Market cap, INR Crore 5234Shares in issue (mn.) 235.17Reuters
TTCH.BO
Bloomberg
TTCH@IN
Share Holding Pattern (%)
Promoters 29.2FII 8.3Domestic Inst. & Corp Body 37.6Public & Others 25.3
TataChemicals Accumulate 
CMP: 230 Target: 345
Investment Period: 1 year
We initiate a Buy call on Tata Chemicals with a 50% upsidepotential on the stock from thecurrent levels.Investment advice is based on very strong balance sheet, diversifiedbusinesses and strong Domestic Businessfor the company.
Highlights:Investment Arguments
Tata Chemicals has increased its production of its Barbala facility from 864,600 tonnes to1.15 million tonnes. Urea production at the Barbalaplant has stabilized at over 3,500tonnes per day levels. The previous quarter saw the highest ever urea sales on the backof improved availability after debottlenecking the plant.Global Soda Ash Operations are running at 70-75% capacity due to sluggish globaldemand and 9% incentive to Chinese producers.
 The company’s current news &future projects.
1.
Tata Chemicals Ltd expects demand to ease to 3.5-4 percent in FY10 from 5percent last year as its overall growth rate comes down.(Source-Reuters , 8
th
June 2009).
2.
Tata Chemicals would be investing 250 Crore FY10, 50 Crore in setting up acustomised fertiliser plant at Barbalain the northern state of Uttar Pradesh in 2010and the rest in normal maintenance of assets. (Source-Reuters, Mumbai 28
th
May). Capital Outlay has been trimmed down from 500 Crore to Rs. 250 Croredue to anticipation of lower demand sighting general Economic Conditions.
3.
There will be increased Interest outgo as Company has started to repayloansforUSD 300 million raised for expansion.ProjectionsFY08FY09FY10EFY11EFY12E
Net Sales
676012160109441182013120
% Growth
4106-10%8%11%
Operating Profit
11841978131318912230
Interest & Depreciation
436818750750750
PBT before EO and Min. interest
748116056311411480
EO
478230100100100
PBT after EO before MI
1226139066312411580
Net profit
9649915179311185
No. of shares
242423.52424
EPS
392222.039.650.4
P/E5.810.3
8.65.74.5
BV175209
207237276
Source: Fairwealth Research Estimates
 
Fairwealth SecuritiesPage 2
Buy: Tata Chemicals
Quarterly Result Round up:
Q4 FY09Q4 FY08Y-o-YGrowth(%)Net Sales
1894146030
Other Income Operating
38514-93
Operating Profit
2362460
OPM Margin (%)
1317
Interest
11439190
PBDT
161722-78
Depreciation
1087936
PBT
53642-92
National Forex gain/loss
290-9 LP
PAT
343633-46
Extra-Ordinary
-234-69239
PAT
172528-67
EPS
99101-2
Source: Company Data, Capital Line
Result Analysis:
Tata Chemicals posted excellent consolidated top-line growth of 30% to Rs 1,894.58Crore during the 4
th
quarter ended March 2009.Company’s global operations have faced strong headwinds, especially Soda Ashbusiness which is expected to run at only 70-75% utilization, however domesticBusinesses will do well
.
Year on Year numbers are not Comparable as last year Company had other Incomeof 514Crore, on account of Sale of Investments
Full year performance:
The consolidated top-line of the company for the full year ended March 2009 morethan doubled to Rs 12,257.66 Croremainly backed by the record growth in sale ofurea during the year under review.OPM falling 230 bps to 16.1% during the year. Thus the absolute operating profitincreased by 78% to Rs 1,978.34 Crore during the year.The interest cost and the depreciation allowance during the period increased by189% and 35% to Rs 395.26 Crore and Rs 422.64 Crore respectively. Hence theprofit before tax before forex gain/loss was flat at Rs 1,243.81 Crore during the yearended March 2009.The company's subsidiaries Brunner Mond, IMACID and GCIP posted decent growthduring the year under review.
 
Fairwealth SecuritiesPage 3
Buy: Tata Chemicals
World’ second largest Soda Ash and third largestSodium Bicarbonate producer.12% market share in Urea Market among privateplayers.Tata Salt continues at number one position withmarket share of about 44%. Tata Salt Lite hasbecome the market leader in the low sodium saltcategory within the first year of its launch
Total NPK : Consumption(ThousandTonnes)
Year
Country
2006 2005 2004
Brazil
8878872010655
China
501514666843077
India
216522034018400
United States
208351927320091
Source:CIA world Fact book 
Total NPK : Production
Year
Country
2006 2005 2004
Brazil
311728993046
China
461274269139379
India
155131520215357
United States
156941776218217
Source: CIA world Fact book 
Company Description
Established in 1939,
Tata Chemicals Limited (TCL) is the world’s second largestproducer of soda ash with manufacturing facilities in India, UK, Kenya and USAand total capacity of 5.5 MT Per Annum.
Soda Ash production of Tata Chemicals hasgone up from 0.9 MT in 2005 to 5.5MT in 2009. Almost all of the capacity increase hasbeen led by inorganic Growth. Company is also world’s third largest manufacturer ofSodium Bi Carbonate.The company also manufacturers bulk chemicals like sulphuric acid, phosphoric acid,and Sodium Tripoly Phosphate (STPP). TCL is also India’s leading manufacturer of ureaand phosphoric fertilizers and is the pioneer and India’s market leader in the branded,iodized salt segment.TCL has undertaken several key steps recently to leverage its expertise in chemistry andagriculture to develop high-tech and more sustainable products. It set up the TCLInnovation Centre in 2004 to develop world-class R&D capability in the emerging areas ofnanotechnology and biotechnology. Leveraging its in-house research capabilities inbiology and crop genomics, it is developing a significant presence in bio fuels space andis setting up a 30KL per day pilot plant at Nanded, in Maharashtra, which will use sweetsorghum as feedstock. TCL has also undertaken field research on Jatropha, a non-edibletree crop for biodiesel production. Most recently, its subsidiary, Tata Chemicals AsiaPacific Pte Ltd, entered intodefinitive agreements with JOil (Singapore) Pte Ltd. JOil, aJatropha seedling company based in Singapore, set up by the Temasek Life SciencesLaboratory Ltd (TLL), along with other investors in Singapore.
Industry Potential:
The Indian fertilizer industry with a capacity of 12.1 MillionMT of nitrogen and 5.6 millionMT of phosphoric nutrient is one of the largest in the world and has over the years,played a significant role in the development of agriculture in the country. Fertilizerconsumption in India is among the highest in the world, however compared to total arableland in India, our Fertilizer usage per acre of Crop is less than all major agriculturalnations. Considering the overall poor quality of Soil in most parts of India, India’sdependence on Fertilizers is ever Increasing. We expect Industry to grow by 6% overnext 5 years, double our estimates for Agricultural Growth.

Activity (5)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads
Apoorv Jhudeley liked this
kukutessusumu liked this
Vikas Khare liked this

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->