Good times are ahead for Tata Chemicals Limited as well as its shareholders, The Insider learns. The company is set to reap a bonanza from a 30 per cent jump in prices of soda ash. The company is India's largest soda ash producer with a marketshare of close to 40 per cent. Prices of alkalies have risen sharply internationally during the last few months. This should also reflect in a better bottomline for the company in the results to be announced this week
Also the company is set to spring some rather pleasant surprises for its shareholders. Its restructuring exercise is likely to infuse huge cash into the company while increasing its profitability as well.
Tata Chemicals has seen an inflow of over Rs.200 crore from the sale of its holding in ACC through its subsidiary which is now merged with it. It is looking for buyers for its detergents business and with a couple of MNCs being active suitors, a deal is expected soon. That should swell the kitty soon.
Also Tata Chemicals has a 4 lakh tonnes capacity cement plant that it proposes to sell. At current valuations an outright sale of the plant would fetch close to Rs. 200 crore for the company. In all, over Rs.400 crore in cash is expected to flow into the company's kitty soon. The company is also likely to gain from changes in the fertiliser policy in the coming budget proposals.
Tata Chemicals has paid a dividend of over 50 per cent every year for the last seven years. This year the dividend payout could be higher in view of the larger cash inflow. At the current valuation of the stock, dividend yield alone on last year's dividend is over 9 per cent per annum, an extremely attractive proposition for value investors as well as those looking for growth in the near future.