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Wednesday, April 13, 2011

Steady but not Spectacular-Tata Chemicals

Tata Chemical has never been one of those stocks the mere mention of which sent Traders pulse soaring.With average P/E 11.8x,dividend yield 2.5% and a PEG Ratio of .90% its been steady if not spectacular.
With its investment in Olam international's greenfield fertilizer project in Gabon,Africa its taken its products closer to the major markets of the US,LATAM countries and Europe.A good deepwater port and relative political stability are important factors.The Indian Governmentis likely to increase gas allocation for Fertlizer sector thereby increasing the bottomline by 100-150bips at least.

Its a BUY at current market price(CMP) Rs 354 and a TARGET price of Rs 430+ which is a 20% upside from current levels.Its a good investment for the midterm