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Tata Chemicals’ stock falls 4% as the company returns to losses in Q3

Stocks
2 min Read Feb 5, 2025
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Tata Chemicals' stock saw a sharp decline of 4% on February 4, 2025, after the company reported disappointing Q3 earnings. The chemical giant posted a net loss of ₹21 crore for the December quarter, marking a significant reversal from the ₹194 crore net profit it recorded in the same period last year.

With revenue falling and operational margins shrinking, investors are left wondering whether this downturn presents a buying opportunity or a sign to stay cautious when they invest in stocks.

Lower soda ash prices and exceptional losses weigh on earnings

At 09:48 AM on February 4, 2025, Tata Chemicals' shares were trading at ₹905.40 on the NSE, reflecting investor concerns over the company's weak performance. The main factors behind the losses included:

  • A 3.8% decline in revenue, with Q3 earnings at ₹3,590 crore compared to ₹3,730 crore a year ago.

  • A drop in operating margin to 12.1% from 14.5% in the previous year.

  • A one-time exceptional loss of ₹70 crore, arising from employee termination benefits, plant decommissioning, and closure costs after shutting down soda ash production at its Lostock plant in the UK.

The global decline in soda ash prices and a production outage in the US further pressured the company's bottom line.

Debt rises amid operational challenges

Tata Chemicals' financials also revealed a surge in debt levels, adding to investor concerns. As of December 31, 2024:

  • Gross debt stood at ₹6,722 crore, up ₹810 crore from last year.

  • Net debt rose by ₹952 crore to ₹5,329 crore, mainly due to lower EBITDA and higher working capital needs across the US, Kenya, and India.

While long-term investors often look for stability before they invest in stocks, rising debt could pose additional risks. CEO, R Mukundan, acknowledged that the short-term outlook remains challenging due to weak demand and supply pressures. However, he expressed optimism that long-term growth in sustainability-driven sectors could help stabilise the business.

Summing up

Tata Chemicals' weak Q3 results led to a 4% drop in its stock price, as net losses and lower margins disappointed investors. Declining soda ash prices, operational setbacks, and higher debt weighed on performance, raising concerns for those looking to invest in stocks. While the company expects near-term challenges, its long-term outlook hinges on recovery in demand and strategic cost management.

As of 11:46 AM on February 4, 2025, Tata Chemicals' stock was down 4.40%, trading at ₹903.30 per share after closing at ₹944.90 per share in the previous session. Investors should keep a close watch on Tata Chemicals' stock price in the coming days and weeks. Analysing its reaction to recent developments can help in making informed investment decisions.