Stock Idea - Tata Chemicals

Recommendation: Buy

CMP: Rs 276 (as of Wednesday)

Target Price: Rs 374

 

Key points:

·         The acquisition of Brunner Mond in Aug 2006 propelled Tata Chemicals (TCL) into the league of global soda ash majors. The Brunner Mond Group has manufacturing facilities in the UK, Netherlands and Kenya.

·         The capacity of the Magadi plant in Kenya has been doubled from 3.5 lakh tonnes to 7 lakh tonnes. I expect the expanded capacity to operate at 38% utilization levels in FY08E and attain full utilization from next year onwards.

·         In a nutshell, Potential upside: 36%, and I maintain Buy recommendation with a time frame of 12 months.