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TATACHEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.4
| Stock Code | TATACHEM | Market Cap | 16,567 Cr. | Current Price | 650 ₹ | High / Low | 1,027 ₹ |
| Stock P/E | 24.8 | Book Value | 739 ₹ | Dividend Yield | 1.69 % | ROCE | 3.67 % |
| ROE | 2.81 % | Face Value | 10.0 ₹ | DMA 50 | 716 ₹ | DMA 200 | 817 ₹ |
| Chg in FII Hold | -1.47 % | Chg in DII Hold | 0.23 % | PAT Qtr | 85.3 Cr. | PAT Prev Qtr | 178 Cr. |
| RSI | 24.8 | MACD | -15.8 | Volume | 7,90,745 | Avg Vol 1Wk | 5,15,159 |
| Low price | 649 ₹ | High price | 1,027 ₹ | PEG Ratio | -2.04 | Debt to equity | 0.11 |
| 52w Index | 0.45 % | Qtr Profit Var | 18.4 % | EPS | 26.4 ₹ | Industry PE | 16.5 |
📊 Financial Overview
- Revenue & Profit Growth: Quarterly PAT fell from ₹178 Cr. to ₹85.3 Cr., showing earnings weakness despite a YoY profit variation of +18.4%.
- Margins: ROE at 2.81% and ROCE at 3.67% reflect poor profitability and capital efficiency.
- Debt: Debt-to-equity ratio of 0.11 indicates low leverage, ensuring financial stability.
- Cash Flow: Stable due to diversified chemical operations, but profitability remains under pressure.
💹 Valuation Indicators
- P/E Ratio: 24.8 vs Industry PE of 16.5 → slightly expensive compared to peers.
- P/B Ratio: Current Price ₹650 vs Book Value ₹739 → ~0.88x, indicating undervaluation relative to book value.
- PEG Ratio: -2.04 → signals weak growth outlook and overvaluation relative to earnings trajectory.
- Intrinsic Value: Estimated fair value near ₹600–630, suggesting current price is slightly above fair value.
🧪 Business Model & Competitive Advantage
- Operates in chemicals, fertilizers, and specialty products with diversified exposure.
- Competitive advantage lies in brand strength and Tata Group backing, though operational efficiency is weak.
- Global exposure in soda ash and chemicals provides scale but profitability remains modest.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive between ₹600–630, closer to intrinsic value.
- Long-Term Holding: Suitable for patient investors; hold for 3–5 years with caution due to weak ROE/ROCE and earnings volatility.
✅ Positive
- Low debt-to-equity ratio (0.11) ensures financial stability.
- P/B ratio below 1.0 indicates undervaluation relative to book value.
- DII holdings increased (+0.23%), showing domestic institutional support.
⚠️ Limitation
- Weak ROE (2.81%) and ROCE (3.67%) highlight poor efficiency.
- P/E ratio (24.8) is higher than industry average despite weak profitability.
- PEG ratio (-2.04) signals negative growth outlook.
📉 Company Negative News
- Quarterly PAT decline from ₹178 Cr. to ₹85.3 Cr. highlights earnings pressure.
- FII holdings decreased (-1.47%), showing reduced foreign investor confidence.
📈 Company Positive News
- DII holdings increased, reflecting domestic confidence.
- Strong brand presence under Tata Group provides stability.
- Undervaluation relative to book value offers potential entry opportunity.
🏭 Industry
- Chemicals industry is cyclical, driven by raw material costs and global demand.
- Industry PE at 16.5 shows sector is moderately valued compared to Tata Chemicals’ premium.
- Global demand for soda ash and specialty chemicals supports long-term prospects.
🔎 Conclusion
Tata Chemicals shows weak fundamentals with poor ROE/ROCE and declining quarterly profits, though low debt and undervaluation relative to book value provide some comfort. Entry around ₹600–630 offers better risk-reward. Long-term investors can hold for 3–5 years, benefiting from Tata Group stability and industry demand, but caution is advised due to earnings volatility and modest efficiency.