Tata Chemicals (TATACHEM)

FairStock Score: 20/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Debt-to-equity of 0.34 is moderate, so the balance sheet is not highly leveraged.
• Stock trades below book value at P/B of 0.83 versus book value of ₹847.62.
• Promoter holding of 37.98% provides some governance stability.
• Five-year revenue CAGR of 7.86% shows long-run demand growth despite recent weakness.
• Dividend yield of 1.53% offers modest income while waiting.

Concerns

• ROE of 0.83% and ROCE of 3.96% are far below acceptable returns; latest quarter posted a net loss of ₹69 Cr.
• Valuation is expensive despite low P/B: P/E of 67.18, EV/EBITDA of 220.66, and DCF value of ₹68.73 versus price of ₹707.70.
• Altman Z-Score of 1.40 indicates financial distress risk, and free cash flow of ₹94 Cr is thin relative to market cap.
• Sales growth is negative at -1.33%, profit growth is 0%, and commodity chemicals lack pricing power.

AI Analysis

Let me apply the only two rules that matter: don't lose money, and remember rule number one. Tata Chemicals is a commodity chemical business, and commodity businesses rarely deserve premium multiples without a fundamental cost advantage. The numbers here do not show one. Return on equity is a woeful 0.83% and ROCE is 3.96% — far below what a shareholder could earn elsewhere. The latest quarter made a net loss of ₹69 Cr on sales of ₹3,550 Cr. That is not a moat; that is a treadmill. The balance sheet is not catastrophic: debt-to-equity is 0.34 and the stock trades at 0.83 times book value of ₹847.62. But I learned long ago that book value is only worth its stated value if the business can earn a decent return on it. At 0.83% ROE, that book value is largely unproductive. The Altman Z-score of 1.40 sits in the danger zone, and free cash flow of ₹94 Cr is thin relative to an ₹18,276 Cr market cap. Valuation is the final nail. The P/E of 67.18 is meaningless on near-zero earnings, EV/EBITDA of 220.66 is absurd, and Graham Number of ₹366.94 and DCF value of ₹68.73 sit far below the market price of ₹707.70. Even a patient investor needs margin of safety; here the price offers a negative margin. Five-year revenue CAGR of 7.86% is respectable, but recent sales declined 1.33% and profit growth is zero. The dividend yield of 1.53% does not compensate for the risk. I would rather wait for a cheaper price and evidence that returns are recovering. In commodity chemicals, discipline matters more than optimism.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer