Tata Chemicals Q2FY25 Results: Steady Growth Amidst Challenges
Tata Chemicals reported a 6% increase in consolidated revenue and 8% growth in EBITDA for Q2FY25. The company faced operational challenges due to heavy rains but maintained overall stability in performance.
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by RA ALOK DAIYA SEBI Reg. INH000011468
Consolidated Financial Performance
Revenue
Consolidated revenue increased by 6% to Rs 3,999 crore. This growth indicates resilient demand for Tata Chemicals' products across markets.
EBITDA
EBITDA grew by 8% to Rs 618 crore. Improved margins in US, Kenya, and Rallis contributed to this growth.
Profit After Tax
PAT before exceptional items rose to Rs 267 crore from Rs 175 crore. This significant increase reflects improved operational efficiency.
Debt Position and Working Capital
Consolidated gross debt increased by Rs 431 crore to Rs 6,479 crore. Net debt rose by Rs 843 crore to Rs 5,190 crore. These increases were due to lower EBITDA and higher working capital requirements.
1
Lower EBITDA Impact
Reduced earnings affected cash flow, contributing to increased debt levels in Q2FY25.
2
Working Capital Expansion
Higher working capital needs in US, UK, and India operations necessitated additional financing.
3
Lease Capitalisation
The capitalisation of leases further added to the debt position in this quarter.
Standalone Performance and Operational Challenges
Standalone revenue decreased slightly to Rs 1,009 crore. PAT fell to Rs 99 crore from Rs 256 crore. Heavy rains in Mithapur significantly impacted production and margins.
Strategic Expansions and Financial Management
1
Bi-carb Expansion
A 0.7 lacs MTPA Bi-carb expansion was commissioned at Mithapur, pending CTO approval.
2
Debt Restructuring
The company issued NCDs worth Rs 1,700 crore at 7.81% interest rate.
3
Loan Repayment
Overseas subsidiary loans were repaid using the funds from NCD issuance.
Corporate Social Responsibility Initiatives
Tata Chemicals continued its commitment to social causes. The company signed an MOU with BAIF for sustainable agriculture and rural development. It also installed a cloth vending machine at Beyt Dwarka Temple.
Market Dynamics and Operational Focus
1
Stable Demand
Soda ash demand remained stable in India, indicating a resilient domestic market.
2
Segment Challenges
Container glass segment in Americas and Europe faced muted demand, impacting sales.
3
Operational Strategy
Focus on customer engagement, stable operations, and cost management to maintain margins.
Future Outlook and Sustainability Efforts
Tata Chemicals remains committed to sustainability and digitisation. The company continues to collaborate with customers and stakeholders to drive these initiatives. Focus on stable operations and cost management is expected to support future growth.