Tata Chemicals share price ride high on soda ash business

The share price of Tata Chemicals surged more than 5 per cent intraday on Wednesday. These gains were not just due to supportive market conditions but also due to the strong growth prospect for its key product such as soda ash.

The company is one of the largest firms with an annual capacity of 4.3 million tonnes of soda ash manufacturing. The product has wide applications in areas such as detergent manufacturing, cleaning products, metallurgy (used in recycling of aluminium and zinc), glass manufacture, etc. Due to such key product suppliers, soda ash reported good demand from soaps and detergent manufacturers despite lockdown as well as the COVID-19 pandemic. Further, these commodities were classified as essential commodities, which also helped in maintaining good growth. Though, the decline in demand from flat & container glass segments was the key reason for its decline in revenue for the first quarter.

Soda is a part of the basic chemistry product segment, which contributes to more than 60 per cent of its consolidated revenue. The company has announced that the ongoing Capex for capacity expansion is near completion at its Mithapur Plant. This implementation would help it gain the rapid expansion of essential products. It has also got the environmental approval for soda ash expansion at Mithapur.

The company reported its consolidated revenues at Rs 2,348 crore, down by 9 per cent as compared to Rs 2,584 crore of the corresponding quarter of the previous fiscal.