Tata Chemical Share Price Drops Over 3 pc In Early Trade: Here Are The Reasons For The Dip (image source: Tata Chemicals.com)
Tata Chemicals Share Price: Tata Chemicals, a subsidiary of the Tata Group, saw a decline in its share price on Tuesday, with shares on the Bombay Stock Exchange (BSE) falling over 3 per cent to Rs 1,060 apiece. Similarly, on the National Stock Exchange (NSE), Tata Chemicals shares experienced a similar downturn, losing nearly 3 per cent and reaching Rs 1,060 per share around 9:00 am. The stock hit an intraday low of Rs 1,050 per share on both NSE and BSE during the ealy trading session. This decline in share price followed the company’s announcement of its Q4 financial results on Monday.
Tata Chemicals in Q4 FY24
Tata Chemicals reported a net loss of Rs 850 crore for the January–March FY24 period, marking a significant downturn compared to the profit of Rs 709 crore recorded in the corresponding period of the previous fiscal year. The company attributed this loss primarily to a non-cash write-down of assets amounting to Rs 963 crore related to its UK operations, specifically the Lostock Plant. This exceptional loss had a substantial impact on the company’s financial performance. Additionally, revenue from operations witnessed a decline of 21.1 per cent year-over-year, falling to Rs 3,475 crore for the quarter.
Factors Contributing to Loss and Revenue Decline
Tata Chemicals reported its first quarterly loss in nine years, attributed to a one-time charge incurred in its UK operations, alongside lower prices and demand for soda ash. The company incurred a consolidated net loss of 8.5 billion rupees ($101.9 million) in the quarter ended March 31, compared to a profit of 7.09 billion rupees in the previous year. Revenue from operations also fell by 21 per cent to 34.75 billion rupees, marking the company’s third consecutive quarter of decline.
Impact of Declining Soda Ash Prices
The decline in revenue was largely influenced by lower demand and prices for soda ash, which constitutes two-thirds of Tata Chemicals’ total sales volume. Falling caustic soda prices have made it more attractive for the silicate market, prompting Tata Chemicals to reduce the prices of its soda ash products at least five times since April 2023. Analysts at Emkay Research noted a 21 per cent decline in soda ash prices in the March quarter compared to the previous year. Soda ash is primarily used in glass production, as well as in the soap and detergent industries.Tata Chemicals is recognized as the world’s third-largest soda ash producer, according to its website and analysts at HSBC. Despite facing challenges in the recent quarter, the company remains a key player in the global soda ash market.
