Tata Chem

Tata Chemicals had hit a new high on the back of its exuberant Q1FY15 numbers. Its been a while since Tata Chemicals results have brought so much cheer. Thanks to the good performance clocked in by its soda ash unit and higher realizations from North America, the company’s consolidated net profit jumped up by a huge 133% (YoY) rise at Rs.175 crore, up from Rs.75 crore in previous Q1. The company had posted a huge net loss of Rs.1226 crore in Q4. This bottomline growth was supported by a 17% rise in net sales at Rs.3803 crore.

In terms of performance internals, this quarter saw better volumes and realisations across most verticals. Apart from soda ash, which saw very good demand, even fertilizer sales reported impressive growth. In the Fertisilier business, subsidy outstanding at Rs. 1687 crore continues to drag performance. This coupled with delay in fertiliser policy implementation continues to impact the cash flow and urea profitability above cut off. Its consumer products business is doing well, with Tata Salt retaining market leader position with 57% market share. Its work on European and Kenyan business restructuring is on and their performance is very much on expected lines. Its Magadi (Kenya) restructuring is completed and is also as per plan. Q2 results may have some impact of the restructuring expenses at Magadi. These consolidated numbers includes that of Rallis India too, which reported a good performance for Q1. Monsoon has slowly picked and there is a sense of cautious optimism of deficit coming down and this bodes well for Tata Chemcials. Soda demand is expected to remain good and grow at about 1.5% per annum, with domestic demand expected to remains stable and that in Europe showing signs of recovery.