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Shares of Tata Chemicals Ltd fell more than 6% intraday on Tuesday reacting to the company's disappointing March quarter earnings. Among key earnings parameters, its operating performance was particularly disappointing.

Consolidated Ebitda margin contracted more than than 600 basis points (bps) to 10.7% on the back of steep fall in gross margin to the tune of 590 bps. One basis point is one hundredeth of a percentage point. Ebitda fell nearly 30% y-o-y to 280 crore in the March quarter. Ebitda is short for earnings before interest tax depreciation and amortization.

Analysts at Motilal Oswal Financial Services Ltd pointed out that operating margins were estimated at 17% and Ebitda at 430 crore. "One-off item, which impacted Ebitda in its North American operations, was due to the Polar Vortex, leading to higher gas price (net) of Rs45 crore during 4QFY21. Adjusting for the same, Ebitda stood at Rs330 crore, down 18% y-o-y," added the Motilal earnings review report.

In a press statement, the company's management pointed out that apart from one-off in the US business, earnings were also impacted by oneoff in UK operations due to tax asset write off and re-financing cost. Further, consolidated revenue of its basic chemistry products business and specialty products business increased 6% and 38% y-o-y, respectively.

On a consolidated basis, its net profit fell 85% year-on-year from 198 crore to 29 crore in Q4FY21. Net income from operations rose by 11% y-o-y to 2,636 crore, but that offered hardly any comfort to investors.

Meanwhile, the company's management also warned of further pressure on margins due to rising input cost inflation. "We are witnessing strengthening of Spot soda ash prices which will ease margin pressures sequentially in the coming quarters," added the press release.

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