Tata Chemicals slips 2% after Morgan Stanley downgrades the stock to 'equalweight'

Shares of Tata Chemicals, a Tata group company, were down nearly 2 per cent, recording a day’s low of Rs 959.35 apiece after global brokerage Morgan Stanley downgraded the stock and cut its target by 23 per cent. The brokerage has raised concerns after Tata Chemicals cut its soda ash prices.

According to the brokerage, the soda ash fundamentals are likely to soften as new capacity ramps up. Morgan Stanley has further said that deflationary energy prices are hurting low-cost producers and should drive a significant earnings downgrade cycle. The global brokerage has downgraded Tata Chemicals to ‘Equalweight’ from ‘Overweight’ and has cut the target price from Rs 1192 apiece to Rs 916 a share, which translates to a downside of 4.8 per cent from the current market price.

Motilal Oswal, in a report, has also said that the impact of the soda cost cut by Tata Chemicals could negatively affect the company. It further said that the company has followed Nirma, the detergent manufacturer's suit, with a downward revision of soda ash prices.

Tata Chemicals manufactures light soda ash. The company is among the world's largest and most geographically diversified soda ash companies, with a supply chain that can service customers across the globe.

As of 10:03 AM, shares of Tata Chemicals were trading at 962.2 apiece on the NSE, down 1.61 per cent. The stock hit a 52-week low on July 1, 2022, and a 52-week high on October 11, 2022. It's the second consecutive session that the scrip has been trading in the red.

Tata Chemicals share price: Past performance

So far in 2023, shares of Tata Chemicals have risen over 2 per cent against the headline index’s rise of over 3 per cent. In the past month, the stock has declined over 2 per cent against the Nifty50’s rise of over 2 per cent.

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