TATACHEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | TATACHEM | Market Cap | 20,610 Cr. | Current Price | 809 ₹ | High / Low | 1,027 ₹ |
| Stock P/E | 30.9 | Book Value | 739 ₹ | Dividend Yield | 1.36 % | ROCE | 3.67 % |
| ROE | 2.81 % | Face Value | 10.0 ₹ | DMA 50 | 702 ₹ | DMA 200 | 785 ₹ |
| Chg in FII Hold | -0.36 % | Chg in DII Hold | 0.43 % | PAT Qtr | 85.3 Cr. | PAT Prev Qtr | 178 Cr. |
| RSI | 74.4 | MACD | 30.4 | Volume | 69,42,142 | Avg Vol 1Wk | 95,87,547 |
| Low price | 580 ₹ | High price | 1,027 ₹ | PEG Ratio | -2.53 | Debt to equity | 0.11 |
| 52w Index | 51.2 % | Qtr Profit Var | 18.4 % | EPS | 26.4 ₹ | Industry PE | 19.0 |
📊 TATACHEM (Tata Chemicals Ltd.) shows weak fundamentals despite strong brand presence. ROE (2.81%) and ROCE (3.67%) are very low, reflecting poor efficiency. Valuations are stretched with a P/E of 30.9 compared to industry average of 19.0, and a negative PEG ratio (-2.53) highlights poor growth prospects relative to price. EPS of ₹26.4 is modest, and dividend yield of 1.36% provides limited income support. Debt-to-equity ratio is low (0.11), ensuring financial stability. Quarterly PAT declined sharply (₹178 Cr → ₹85.3 Cr), raising concerns about earnings consistency. Technical indicators show overbought conditions with RSI at 74.4, though price trades above both 50 DMA (₹702) and 200 DMA (₹785), reflecting short-term strength.
💰 Ideal Entry Price Zone: ₹680 – ₹750 (near 50 DMA support and below current price).
📈 Exit / Holding Strategy: Hold for 2–3 years; consider profit booking near ₹1,000–₹1,025 resistance unless profitability improves. Long-term compounding potential is limited unless return ratios strengthen.
✅ Positive
- Strong brand and diversified chemical business.
- Low debt-to-equity ratio (0.11) ensures financial stability.
- DII holdings increased (+0.43%), showing domestic investor confidence.
- Dividend yield of 1.36% provides income support.
- Price trading above 200 DMA reflects medium-term strength.
⚠️ Limitation
- Low ROE (2.81%) and ROCE (3.67%).
- P/E of 30.9 trades at a premium to industry PE of 19.0.
- Negative PEG ratio (-2.53) indicates poor growth prospects.
- RSI at 74.4 signals overbought conditions.
- Quarterly PAT decline highlights earnings volatility.
📉 Company Negative News
- Quarterly PAT dropped from ₹178 Cr to ₹85.3 Cr.
- FII holdings declined (-0.36%), showing reduced foreign investor interest.
📈 Company Positive News
- DII inflows (+0.43%) reflect domestic institutional support.
- Quarterly profit variation (+18.4%) shows some recovery momentum.
⚗️ Industry
- Chemicals sector benefits from industrial demand and global exports.
- Commodity price volatility and regulatory risks remain challenges.
🔎 Conclusion
TATACHEM is a stable company with strong brand presence but weak efficiency and stretched valuations. Long-term investors should accumulate only near ₹680–₹750 for safety. Current holders can stay invested for 2–3 years, targeting exits above ₹1,000–₹1,025 if earnings growth does not justify premium valuations.