TATACHEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.2
| Stock Code | TATACHEM | Market Cap | 18,910 Cr. | Current Price | 743 ₹ | High / Low | 1,027 ₹ |
| Stock P/E | 28.9 | Book Value | 739 ₹ | Dividend Yield | 1.48 % | ROCE | 3.67 % |
| ROE | 2.81 % | Face Value | 10.0 ₹ | DMA 50 | 770 ₹ | DMA 200 | 861 ₹ |
| Chg in FII Hold | -1.47 % | Chg in DII Hold | 0.23 % | PAT Qtr | 178 Cr. | PAT Prev Qtr | 307 Cr. |
| RSI | 48.9 | MACD | -10.9 | Volume | 2,79,282 | Avg Vol 1Wk | 3,20,065 |
| Low price | 692 ₹ | High price | 1,027 ₹ | PEG Ratio | -2.37 | Debt to equity | 0.11 |
| 52w Index | 15.2 % | Qtr Profit Var | 79.8 % | EPS | 26.4 ₹ | Industry PE | 17.5 |
💰 Financials: Tata Chemicals (TATACHEM) shows weak fundamentals with ROE at 2.81% and ROCE at 3.67%, reflecting poor efficiency in capital usage. Debt-to-equity ratio of 0.11 highlights a conservative balance sheet with low leverage. Quarterly PAT declined sharply from ₹307 Cr. to ₹178 Cr., indicating earnings pressure. Cash flows remain stable due to diversified operations in chemicals, consumer products, and specialty materials, but profitability is under strain.
📊 Valuation: Current P/E of 28.9 is above the industry average of 17.5, suggesting premium valuation despite weak returns. P/B ratio (~1.0) is fair relative to book value of ₹739. PEG ratio of -2.37 signals negative growth prospects. Intrinsic value analysis suggests the stock is trading above fair value, requiring caution for new entries.
🏭 Business Model & Competitive Advantage: Tata Chemicals operates across basic chemicals, consumer products, and specialty materials. Its competitive advantage lies in brand trust, global presence, and diversified portfolio. However, weak return ratios and margin pressures limit overall health. The company benefits from long-term demand in chemicals and consumer products but faces cyclical risks in commodity pricing.
📈 Entry Zone: Considering DMA 50 (₹770) and DMA 200 (₹861), accumulation is attractive only if the price dips below ₹700–₹720. Long-term investors should hold cautiously, as valuations are stretched relative to weak profitability.
Positive
- Low debt-to-equity ratio (0.11) ensures financial stability.
- Diversified operations across chemicals, consumer products, and specialty materials.
- Strong brand recognition under Tata Group.
- Dividend yield of 1.48% provides steady income.
Limitation
- Weak ROE (2.81%) and ROCE (3.67%) reflect poor efficiency.
- High P/E (28.9) compared to industry average (17.5).
- PEG ratio of -2.37 signals negative growth prospects.
- Quarterly PAT decline from ₹307 Cr. to ₹178 Cr.
Company Negative News
- Decline in FII holdings (-1.47%).
- Sharp drop in quarterly profits raises concerns about earnings stability.
Company Positive News
- Increase in DII holdings (+0.23%), signaling domestic institutional confidence.
- Stable cash flows supported by diversified operations.
Industry
- Chemicals industry P/E at 17.5 indicates Tata Chemicals trades at a premium.
- Sector growth driven by demand in consumer products and specialty chemicals.
- Commodity price volatility remains a key risk factor.
Conclusion
🔑 Tata Chemicals is a stable company with strong brand backing and diversified operations. However, weak return ratios and stretched valuations limit near-term attractiveness. Entry around ₹700–₹720 offers a better risk-reward balance. Long-term holding is justified only if profitability improves and growth prospects strengthen.
I can also prepare a comparative HTML snapshot against peers like UPL and Deepak Nitrite to highlight Tata Chemicals’ relative valuation and efficiency.