Tata Chemicals Upgrade earnings on strong results : :Emkay

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Tata Chemicals

Upgrade earnings on strong results

ACCUMULATE

CMP: Rs327                                        Target Price: Rs400

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n     Q2FY12 results were above estimates with revenues of Rs 35.7 bn, +19% yoy and APAT of Rs 2.9 bn, +25% yoy with positive surprise at EBITDA margins at 18.9%

n     Subsidiary in US with PAT of Rs 770 mn (+43%yoy) and in UK with PAT of Rs 190 mn (+171% yoy) along with strong domestic margins contributed to profit growth

n     Upgrade FY12E estimates by 11% to Rs 35.7 on back of strong H1FY12 results however our outlook on global soda ash demand remains cautious

n     Reiterate Accumulate rating with price target of Rs 400 at current valuations of 9x FY12 earnings, lower than historical average of 11x