Tata Chemicals downgraded to 'Sell' by MarketsMOJO due to weak financial performance

Tata Chemicals, a largecap company in the diversified industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 18, 2024. This decision was based on the company's flat results in the September 2024 quarter, with a decline of -61.62% in its PAT (HY) at Rs 334.24 crore and a ROCE (HY) of 5.56%, the lowest in recent years. Additionally, the company's cash and cash equivalents (HY) also saw a decline, reaching its lowest at Rs 555.00 crore.
In the past year, Tata Chemicals has underperformed the market, generating a return of only 4.26% compared to the market's (BSE 500) return of 34.39%. This can be attributed to the company's weak financial performance and lack of price momentum, as indicated by its sideways technical trend.

However, the company does have a strong ability to service debt, with a low Debt to EBITDA ratio of 1.41 times. It also has an attractive valuation with a ROCE of 4 and an Enterprise value to Capital Employed of 1.2. The stock is currently trading at a discount compared to its average historical valuations.

It is worth noting that Tata Chemicals has a high institutional holding of 33.94%, indicating that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors.

In conclusion, while Tata Chemicals may have a strong ability to service debt and an attractive valuation, its recent financial performance and underperformance in the market make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.