What is the future of Tata Chemicals Stock?

The working rationale of the stock market can be easily summarized using a quote from Warren Buffet.

Now coming to the question.

No analyst in the world can state with certainty how Tata Chemicals stock will perform and how much returns it will make

Reasons:

1. Despite demand-supply being a critical factor, stock market moves more on sentiments
2. Seen and unforeseen incidents (like war, commodity prices, blockades, default, etc.) can lead to price correction
3. Mass Optimism trumps realism and rationalism when the markets are in an upswing
4. Chronic Pessimism grips the psyche when the markets fall unchecked
5. Good Earnings and developments are not assurity of price rise of the stock/share

So, let us look at the stock – Tata Chemicals

1-Year Return: ~13–14%

Reason for the sudden spike in stock price:

• News in March 2024 about Potential Listing of Tata Sons via IPO Route (which was a dead end and the stock corrected)
• Sharp rise in Soda Ash prices

We need to understand the high volume segments like edible salt, spices, and lentils were moved from Tata Chemical to Tata Global Beverages. This was meant to consolidate the FMCG business and for value unlocking. (Link)

Now, Tata Chemicals is left with mainly – soda ash, chemicals for areas like agriculture, cement, energy storage, food & nutrition. Among these – soda ash has application in multiple areas

With the global economy limping back to normalcy and with rate cuts excepted in the H2 of 2024, there is a possibility of high volumes-revenue-profits.

Also, work in the area of energy storage: Li-Ion Batteries will have to be closely watched as Tata Chemicals had declined to participate in the government’s ₹18,100-crore production-linked incentive (PLI) scheme over the worries about potential Return on Investment (RoI) (Link)

Considering this, I would personally feel that the stock price might move between +/- 15-20% range from the current value till there is a solid reason (JV with a foreign battery manufacturer or better operational efficiency or high capacity utilization). This trend might hold for the short to medium term perspective.

Despite this, the company and the business are sound to be held for a long term perspective and will be a major wealth creator for its investors.

Hope this helps

Follow me for more info on Astrology, Finance, and other topics

God Bless!