Hold Tata Chemicals: PINC

PINC Research has maintained its hold rating on Tata Chemicals in its November 25, 2008 research report. "Tata chem. announced successful refinancing of the USD 300 million bridge loan it had taken for funding the GCIP (General Chemicals Industrial Products Inc.) acquisition in Mar’08."

"At the CMP of Rs 138, Tata chem. is trading at a P/E of 4.5x and EV/EBIDTA of 4.3x its FY10 estimates. With slowdown in construction activity and automobile manufacturing, prices of glass are witnessing significant correction. The same would put pressure on soda ash prices, especially at a time when full year contracts are due for renewal in Jan’09 for BMG and GCIP facilities. We have factored in a 15% reduction in soda ash prices across all facilities. The correction in soda ash prices can be more severe than estimated by us. Hence we maintain our ‘HOLD’ recommendation," says PINC's research report.