Tata Chemicals in the limelight

Tata Chemicals is pretty much in the limelight today with the stock opening Rs.14 higher at Rs.434, going to an intra day high of Rs.442.70 and is currently up over 4% at Rs.438.20. Volumes have more than doubled  from 42,000 shares over 2W average to 67,000 shares today morning alone. 52-week high is at Rs.482.10.

The stock is reacting to unconfirmed reports that the Tata group chairman, Cyrus Mistry has launched a plan to sell of the fertilizer business, in a major restructuring move. It is reported to have asked Kotak Mahindra Bank to help find strategic buyers  and is looking at a jaw-dropping valuation of over one billion dollar.

It is said that prospective buyers list could include Morocco’s OCP, which is the world’s largest producer of phosphate rock and phosphoric acid.

Market cap of Tata Chemicals currently stands at Rs.7800 crore out of which some Rs.3000 crore is attributable to the fertiliser business. The logic being given is that when the loss making Mangalore Chemicals could fetch valuation of twice its market cap, surely profit making Tata Chemicals fertilizer business will fetch more.

This news is yet to be confirmed by the company; so currently the stock price is up purely on speculation.