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Multibagger stock: Tata Chemicals shares are one of the multibagger stocks that Indian stock market has delivered in last few years. However, the stock has remained under sell-off stress in last one year. However, those who had bought this stock during the sell-off triggered after the outbreak of first Covid-19 wave in 2020. From April 2020 to till date, this chemical stock has surged from around 220 to 1,100 apiece levels, logging near 400 per cent appreciation in this near two and half year time. However, Geojit is still bullish on this Tata group stock and has recently upgraded its target to 1,340 in long term.

On valuations of this multibagger chemical stock, Geojit report says, "TCL has been reporting solid performance consistently despite a challenging environment. We remain optimistic about continued soda ash demand across geographies, which will boost the topline. The ongoing global soda ash shortage will further improve realisations through heightened pricing. The management expects the positive momentum to continue in the near to short term and aims to leverage digitalisation for further growth."

On margins of the company, Geojit report says, "EBITDA grew 68.8 per cent YoY to Rs. 1,015 crore, due in part to better operating leverage and price revisions, which offset input cost inflation. EBITDA margin expanded 521 bps YoY to 25.4 per cent. Consequently, PAT increased a higher 87.2 per cent YoY to Rs. 641 crore. The UK business turned profitable."

On other fundamentals that may fuel Tata Chemicals share price rally, the brokerage report said, "TCL’s consolidated revenue grew 34.2 per cent YoY and 14.8 per cent QoQ to Rs. 3,995 crore in Q1FY23, driven by robust demand for soda ash (detergent and glass players), bicarb and salt. Revenue from basic chemistry products grew a solid 40.8 per cent YoY to Rs. 3,060 crore, led by improved realisations and higher volumes. Revenue from specialty products increased 17.1 per cent YoY to Rs. 934 crore on account of strong growth in crop care. On a geographic basis, India revenue grew 48 per cent YoY to Rs. 1,225 crore on the back of strong demand for specialty products. US revenue grew 34 per cent YoY to Rs. 1,119 crore due to strong export prices and robust demand in the export market."

On its suggestion to positional investors in regard to this multibagger chemical stock, Geojit report said, "We reiterate our BUY rating on the stock, with a revised target price of Rs. 1,340 using a target multiple of 20x P/E on FY24E adj. EPS."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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