Reviews
In this edition, we have reviewed Tata Chemicals and Trent. We suggest our reader-investors to HOLD Tata Chemicals and Trent
We had recommended Tata Chemicals in Volume 33, Issue No. 13, dated May 28– June 10, 2018, under the ‘Choice Scrip ‘section. The stock of the company was then trading at Rs717.20. We had recommended the stock looking at the company’s business expansion, the reduction in debt and its strong operating performance.
Tata Chemicals Ltd (TCL) is the second largest producer of soda ash in the world, with manufacturing facilities spread across four continents. TCL is market leader in iodised salt segment and leading manufacturer of urea and phosphatic fertilisers. The product range of the company includes chemicalsmanufactures soda ash which is used in manufacture of glass, soaps, detergents. It is also used in metal refining, textile processing, etc.
Soda ash also is used in the manufacture of cement. Caustic soda is used for manufacturing rayon, pulp, paper, gypsum-used in pharmaceuticals, insecticides and bromine.
On the financial front, the company’s net sales have increased by 14 per cent and were reported at Rs995.81 crore in Q1FY19 versus Rs867.8 crore in Q1FY18. The PBIDT of the company has also shot up 25 per cent in Q1FY19 and came in at Rs262.04 crore as against Rs208.59 crore in the same quarter of the previous fiscal.The profit after tax (PAT) rose substantially by 69 per cent and stood at Rs263.89 crore in Q1FY19 versus Rs155 crore in Q1FY18.
The stock of the company has fallen by 7 per cent since our recommendation. We request our reader-investors to HOLD the stock as we expect the stock to move upwards considering the financial performance of the company.
We had recommended Trent in Volume 33, Issue No. 19, dated Aug 20 – Sept 2, 2018, under the ‘Choice Scrip’ section. The stock of the company was then trading at Rs363.
We had recommended the stock looking at the company’s growth potential and the strategic acquisitions of the company. Trent Ltd is a part of the Tata Group and is engaged in the retail business. The business areas of the company includes
Westside: With a number of stores across India, this chain offers clothes, footwear and accessories for men, women and children, along with furnishings, artefacts and a range of home accessories.
Star Bazaar: This hypermarket chain offers a wide choice of products, including staple foods, beverages, health and beauty products, vegetables, fruits, dairy and non-vegetarian products.
Landmark: A leader in the books and music category, this chain has a range of titles in books and music, and also stocks movies, toys, gift items and stationery.
On the financial front, the company’s net sales have shot up 19.52 per cent in Q1FY19 to Rs590.607 crore versus Rs494.16 crore in Q1FY18. The company’s PBIDT has also gone up 21 per cent and came in at Rs38.36 crore in Q1FY19 as against Rs38.15 crore in Q1FY18. The profit after tax (PAT) reported by the company has however remained stable at Rs38.35 crore compared with Rs38.15 crore.
The share price since recommendation has gone down 13 per cent. With the market sentiment improving and the consumer story being intact there is potential for the stock to recover. We would recommend a HOLD on the basis of the financial numbers.