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Tata group stocks declined on Friday, with Tata Chemicals’ shares falling almost 10% amid a boardroom disagreement over the public listing of Tata Sons. Still, the stock is up around 15% since the Reserve Bank of India (RBI) on 11 September directed its parent, Tata Sons, to list in accordance with the central bank’s guidelines. The move provided some relief to a stock that had lost about 20% in 2026 through 11 September, weighed down by continued pressure in the soda ash market, Tata Chemicals’ key product. The company owns a 2.53% stake in Tata Sons, which could lead to significant value unlocking once the holding company is listed. Tata Chemicals shares had surged almost 40% in the first week of March 2024 following similar reports. The drag On the earnings front, however, soda ash continues to face substantial global pressure amid excess capacity in China, even as the Indian market remains firm. Average value of soda ash FOB (free-on-board) China physical spot index has declined by 10% in the ongoing September quarter (Q2FY27) from the Q1FY27 average, according to Bloomberg data. This, along with continued tensions in West Asia that have raised production costs, could delay an earnings recovery. “We remain cautious on the structural outlook for soda ash, with pricing expected to remain weak due to persistent global oversupply, driven by elevated Chinese utilisation rates, record inventory levels (about 1.7 million tonnes) and strong exports, delaying demand-supply rebalancing,” noted JM Financial Institutional Securities in its Q1 result review. Tata Chemicals’ Q1FY27 financials reflected the challenging market conditions. Ebitda declined 14% year-on-year (y-o-y) to ₹555 crore, even as consolidated revenue grew 14% to ₹4,255 crore. Revenue growth was aided by higher volumes and domestic prices, while Ebitda was hurt by lower realizations in global operations and higher costs. Motilal Oswal Financial Services subsequently cut its FY27 earnings-per-share estimates by 19% after the weak Q1. The company also reorganized its businesses in Q1 to reduce its exposure to cyclical businesses and redirect focus and capital towards consumer and farm segments. Under the new structure, consumer-facing businesses such as salt and sodium bicarbonate have been classified as living essentials; soda ash and other industrial chemicals as industrial essentials; and agrochemicals and seeds as farm essentials. The industrial essentials segment, which contributes more than half of total revenue and bears the brunt of cyclicality, saw revenue grow 13% in Q1. However, Ebit (earnings before interest and taxes) swung to a loss of ₹70 crore from a profit of ₹131 crore a year earlier. While the reorganization could help the company over the medium term, a recovery in soda ash prices will be key to a meaningful improvement in earnings in the near term. Amid the tough business conditions, Tata Chemicals’ management expects FY27 capital expenditure to be around its annual depreciation of ₹1,200 crore. The company’s net debt at June-end stood at ₹5,692 crore, down sequentially from ₹5,961 crore at March-end, following asset monetization. Tata Chemicals monetized ₹300 crore of assets in Q1FY27 and is evaluating further monetization in the second half of the fiscal. Motilal Oswal and JM Financial have set sum-of-the-parts-based target prices of ₹700 and ₹730 for the stock, respectively. The stock currently trades at ₹714 apiece.
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