Tata Chemicals Upgraded to 'Hold' Rating by MarketsMOJO, Strong Debt Servicing and Attractive Valuation

Tata Chemicals, a largecap company in the diversified industry, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This decision is based on several factors, including the company's strong ability to service debt with a low Debt to EBITDA ratio of 1.41 times. Additionally, the stock is currently in a Mildly Bullish range and the technical trend has improved from Sideways on 26-Feb-24. The stocks KST and OBV technical factors are also Bullish, indicating a positive outlook for the stock.
In terms of valuation, Tata Chemicals is considered to be attractive with a ROCE of 10.8 and a 1.1 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations, making it a potential opportunity for investors.

However, the company has faced some challenges in the past year, with a -15.5% decrease in profits despite a -0.51% return for investors. This could be attributed to negative results in December 2023, with a -68.1% decrease in PAT(Q) and a 22.70% increase in INTEREST(9M). Additionally, the OPERATING PROFIT TO INTEREST (Q) is at its lowest at 4.11 times.

Despite these challenges, Tata Chemicals still has a high institutional holding of 34.55%, indicating that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors. However, the stock has underperformed the BSE 500 in the last 3 years, 1 year, and 3 months, suggesting a below par performance in the long term as well as the near term.

In conclusion, while Tata Chemicals may have some challenges to overcome, its strong ability to service debt and attractive valuation make it a 'Hold' for now. Investors should keep an eye on the company's performance and any potential improvements in the future.