Tata Chemicals Rises 11% Today, Jumps 40% In Six Sessions; Know Key Reasons

Tata Chemicals Share Price: Tata Chemicals’ shares zoomed around 11 per cent in morning deals on March 7 to hit a 52-week high of Rs 1,302.15, extending gains to the sixth consecutive session. The six-day rally has seen the stock gain nearly 40 per cent.

The recent rally has come on the back of a Spark Capital note on March 4, which mentioned that Tata Sons, the parent company of the Tata Group, could list within the next 18 months. This is because the Reserve Bank of India classified the company as an upper-layer NBFC.

As per the RBI mandate, an upper-layer NBFC has to list within three years of being notified. Tata Sons was classified in September 2022, which means it will have to list by September 2025.

The rapid gains in the stock price has enhanced the appeal of the stock, drawing attention from investors, analysts said.

It is imperative to exercise caution due to the significant resistance looming around Rs 1,200-1,205, primarily identified through the presence of a previous historical high depicted in the chart analysis, said Jigar S Patel of Anand Rathi Shares & Stock Brokers.

“Therefore, initiating fresh long positions at this juncture is not advisable. For individuals who have already entered the market, it is prudent to consider booking profits and adopting a wait-and-see approach, anticipating a meaningful correction in the stock’s price before contemplating further investment actions,” Patel said.

For the quarter that ended December 2023, Tata Chemicals reported a 60 per cent on-year drop in net profit at Rs 158 crore amid tepid demand across key regions and segments. The Tata Group chemical firm’s revenue fell more than 10 per cent to Rs 3,730 crore.

Tata Chemicals is the world’s third-largest soda ash producer. Fitch Ratings expect the company’s Ebitda (earnings before interest, taxes, depreciation, and amortisation) net leverage to average 2.2x over FY25-FY27 and be commensurate for its rating, driving the “stable” outlook despite the near-term industry pressures.

The margins will improve to 17 per cent from FY26, supported by a gradual demand recovery, supply tightening, and lower energy cost. However, a prolonged period of unfavourable economic conditions and supply glut in the industry could limit margin improvement, Fitch Ratings said.