Tata Chemicals - Results in line with estimates : ACCUMULATE ::Emkay

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Tata Chemicals

Results in line with estimates

ACCUMULATE

CMP: Rs351                                        Target Price: Rs400

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n     Q1FY12 results were in line with estimates with revenues of Rs 29.5 bn, +17% yoy and APAT of Rs 2.04bn, -15% yoy

n     US Subsidiary (TCNA) surprised with 33% profit growth (Rs 770 mn) while UK subsidiary (HFUK) performance (PAT Rs 100 mn) was affected due to lower sales volumes

n     Despite price increase in soda ash across the markets by US$ 40-50 / mt (25-30% yoy), chemical segment margins are likely to remain stable due to higher input cost

n     Though we expect, company to benefit from urea decontrol going forward but contribution to bottomline remains muted (~10% to profit). We maintain Accumulate rating on the stock