Saturday, August 2, 2025

Tata Group stock surges after ‘double upgrade’ from Morgan Stanley

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Shares of Tata Group-backed Tata Chemicals Ltd. are trading 7% higher on Tuesday, July 29, after global brokerage firm Morgan Stanley double-upgraded the stock, in response to its June quarter (Q1FY26) results.Morgan Stanley has double-upgraded Tata Chemicals to ‘Overweight’ amid signs of global supply cutbacks. The brokerage has also raised its price target to ₹1,127 from ₹839 earlier.
Morgan Stanley wrote in its note: “Investor expectations for the commodity chemical cycle are the most bearish we have seen in 20 years of watching the sector. With a supply response underway, we think it’s time to revisit equities.”
The brokerage said that per-unit EBITDA economics in Asia are now below 2002 lows, while production (outside China) for listed players has dropped to 2016 levels.Morgan Stanley believes this cycle has all the ingredients for a positive re-rating of equities.

Tata Chemicals’ focus on self-help measures, including volume growth, cost controls, and a turnaround in its UK operations, combined with multi-year low soda ash prices in China, positions it well in the current environment.

For the June quarter, the company reported a 1.8% year-on-year decline in revenue to ₹3,719 crore, primarily due to lower realisations amid pricing pressures across all regions.Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) rose 13% year-on-year to ₹649 crore. The EBITDA margin improved by 230 basis points to 17.4%, compared to 15.1% in the same quarter last year.

Net profit surged 66% to ₹316 crore from ₹190 crore in the year-ago period. The profit includes ₹75 crore received as an income-tax refund along with interest.

Sales volumes fell 1% year-on-year to 1,265 KTs from 1,278 KTs, primarily due to the cessation of operations at the Lostock facility in the UK.

Management said that the demand-supply balance remains soft, with the Soda Ash market facing continued oversupply and elevated inventory levels across most regions. The global trade environment is also facing uncertainty due to tariff changes.

Prices continued to decline during Q1FY26, and global demand is expected to remain flat in the near term.

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