Tag - nutrition

Expect to touch Rs 170-180 bn revenue in a couple of years – Tata Chemicals

Update on Indian equity market:
After crossing 13,000 for the first time ever, the Nifty-50 could not hold onto the gains as the monthly expiry led volatility kicked in the markets. Nifty closed the day 185 points lower at 12,870. Within the index, only 8 stocks closed the day in green led by ONGC (5.9%), GAIL (2.1%) and ADANIPORTS (1.9%) whereas EICHERMOT (-3.5%), AXISBANK (-3.2%) and KOTAKBANK (-3.2%) led the laggards. Among the sectoral indices, all but one index, PSUBANK (1.9%) traded the day in the red led by REALTY (-2.3%), PHARMA (-2.1%), and BANK (-1.8%).
Excerpts of an interview with Mr. R Mukundan, CEO & Managing Director, Tata Chemicals (TataChem) published on CNBC-TV18 dated 24th November 2020:
Tata Chemicals 2QFY21 result was operationally weaker due to pressure on margins in the basic chemistry segment. All the units are working at full capacity though and the company sees no demand problem from 2HFY21.
The nutrition and agri segment performed well during the quarter. These two segments were unaffected due to the pandemic. Q1 was good and Q2 continued to be even better. Sequentially, material science has done better than 1QFY21.
He said that there are some pricing issues in the export market, but India is doing well. The UK has performed well through the pandemic. The overall momentum is positive. All the sectors are beginning to open up and the company expects to be back to normal somewhere around 2QFY22E.
Regarding the pricing power, he mentioned that as the volumes pick up, the pricing power comes back especially in the material segment.
The company is focusing on the nutraceutical segment and increased allocation of assets. Revenue from this business can scale up to Rs 50bn with this capacity addition.
The company is expecting good growth in the silica business from 3QFY21. Renewables are a big market opportunity for the company currently.
With the capacity additions and business racing towards pre-covid levels, the company is confident of achieving an annual revenue target of Rs 170-180bn in the next couple of years.
Consensus Estimate: (Source: market screener website)
The closing price of Tata Chem was ₹ 368/- as of 25-Nov-2020. It traded at 21x/ 11x/ 9x the consensus EPS estimate of ₹ 17.2/ 34.4/ 40.4 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 332/- implies a P/E multiple of 8x on FY23E EPS of ₹ 40.4/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”