Tata Chemicals share price is on track to have the best week since August 2022 as it nears its all-time high. It has climbed by over 22% this week, making it one of the best-performing Indian stocks. It is up by over 37% from its lowest level in 2023.
Tata Chem stock has gone parabolicTata Chemicals has joined other companies in the conglomerate to surge. For example, as I wrote recently, Tata Motors shares have surged to an all-time high of INR 1,065 as demand for vehicles soared globally.
Tata Consultancy has also roared back to over INR 4,000 as IT spending rose globally. Other IT consulting companies like Infosys and Wipro have also surged this year.
There was no immediate news that pushed Tata Chemical’s stock price sharply higher. A likely reason is that Fitch Ratings, one of the Big Three players, decided to upgrade the company’s credit rating from stable to positive. It affirmed its rating at BB+.
The agency noted that the company is in a good position to weather the current challenges in its soda ash industry. It expects it to maintain an EBITDA net leverage of about 2.2x between 2025 and 2027.
Still, the company will likely have substantial challenges in the near term. In its most recent results, the company said that its income from operations came in at Rs 3,730 cr in the last quarter, a drop of about 10%. Its EBITDA crashed to Rs 542 cr from Rs 922 cr in the previous quarter.
Tata Chemicals main challenge is that it operates in an industry that is highly saturated and oversupplied. The supply surplus of soda ash will likely remain for the foreseeable future. Fitch sees it moving to a breakeven point in FY26.
As a result, the company is going through a margin squeeze. It will likely move from a 14% margin in FY25 to 17% in FY26.
The other potential catalyst for Tata Chemicals is that it can weather these storms because of its scale as the third-biggest soda ash producer in the world. It is also investing to boost production in Kenya, which will help it boost its income when prices stabilise.
Tata Chemicals share price forecast
TATA Chem chart by TradingView
Turning to the weekly chart, we see that the Tata Chem stock price formed a hammer pattern last week. In most cases, this pattern is one of the most popular signs of a bullish reversal.
Now, the stock has jumped above the key resistance level at INR 1,141, the highest swing in January this year. It also retested the crucial point at INR 1,193, its highest level in October 2022. It has remained above all moving averages.
Therefore, I suspect that the Tata Chemicals share price will continue rising in the coming days. This view will be confirmed if it clears the crucial resistance level at INR 1,193. A move above that level will see it rise above INR 1,200 in the near term.
The alternative scenario is where the shares retreat now that they have retested their all-time high. Synch a retreat could push it to INR 1,100.
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