Summary
Tata Chemicals Limited - Q3 FY26 Earnings Call Summary Monday, February 2, 2026, 5:30 PM IST
Event Participants
Executives 2 Nandakumar Tirumalai (CFO), R. Mukundan (MD & CEO)
Analysts 4 Abhijit Akella (Kotak Securities), Ankur Periwal (Axis Capital), Nitesh Dhoot (Anand Rathi), Saurabh Jain (HSBC), Sumant Kumar (Motilal Oswal), Vivek Rajamani (Morgan Stanley)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹3,550 crores | -1% YoY; decline driven by subdued global pricing despite higher sales volumes. |
| Consolidated EBITDA | ₹345 crores | -20.5% YoY; sharply impacted by lower realizations in the US export market. |
| Standalone Revenue | ₹1,204 crores | +3% YoY; supported by higher volumes in India despite pricing pressure. |
| Standalone EBITDA | ₹228 crores | +9% YoY; driven by higher volumes and lower fixed costs. |
| Consolidated PAT* | -₹15 crores | Loss reported vs ₹49 crore profit in Q3FY25 (before exceptional items). |
| Net Debt | ₹5,596 crores | Excludes lease liabilities of ₹772 crores; includes ₹350 crore impact from FX movement. |
| Exceptional Charge | ₹54 crores | Non-recurring provision related to the new labor code in India. |
| China Soda Ash Price | ~CNY 1,200 | -54% since Q3FY23; reflecting impact of low-cost natural soda ash capacity. |
| *PAT before exceptional items |
Geographic & Segment Commentary
- India (Standalone): Revenue grew 3% to ₹1,204 crores with EBITDA rising 9%. Growth was supported by 15% volume growth in Silica and 9% in FOS, alongside commissioning of the L55 line at Mambattu. Strategic focus remains on debottlenecking and non-cyclical products like salt and silica.
- North America (TCNA): Faced severe margin compression due to export pricing in Southeast Asia falling below $155-$160/tonne. US domestic prices were relatively stable (down ~$5/tonne). Management is prioritizing volume over value, rejecting low-margin export contracts in the coming quarter.
- UK & Europe: Business reconfiguration is complete, focusing on pharmaceutical salt and bi-carb. Q3 performance was hit by a snowstorm-led unplanned stoppage at the salt plant, delaying the turnaround by six months. Bicarb is recovering market share using natural soda ash feedstock from TCNA.
- Kenya (Magadi): Revenue increased due to higher volumes, partially offset by lower realizations. The new 50 KT electric calciner was operationalized to produce premium, low-carbon-footprint soda ash, with full stabilization expected by March 2026.
- Rallis India: Revenue grew 19% YoY, driven by strong performance in the crop care and seed businesses.
Company-Specific & Strategic Commentary
- Acquisition of Novabay Singapore: Entered SPA to acquire Novabay to strengthen the premium grade bi-carb footprint in ASEAN and Far East markets. The facility currently imports synthetic soda ash from Europe, which Tata Chemicals plans to replace with more competitive internal sources.
- India Expansion: Board approved ₹515 crore for a 210 KTPA greenfield iodized salt facility in Valinokkam, Tamil Nadu (36-month timeline). Other approvals include ₹775 crore for 50 KTPA precipitated silica at Cuddalore and ₹135 crore for 350 KTPA dense ash at Mithapur.
- Capacity Rationalization: Management has mothballed inefficient units and paused US capacity expansions. The strategic shift moves CAPEX toward non-cyclical, high-margin products (Bi-carb, Salt, Silica) while maintaining return thresholds of 16-18%.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume (US Exports) | Selective Reduction (Q4 FY26) | Management will pause shipments to SE Asia that yield negative contributions. |
| UK Profitability | Break-even/Positive (FY27) | Delayed by 6 months due to storms; expected to reach ₹250cr EBITDA run-rate as pharma salt ramps up. |
| Global Supply | Surplus (Near-term) | New capacities in China (Inner Mongolia) to keep prices subdued until synthetic high-cost plants exit. |
| CAPEX | Sharper Reduction (FY27) | Focus on finishing existing India projects; no major new international CAPEX planned. |
Risks & Constraints
| Risk | Context |
|---|---|
| Oversupply & Pricing | Global soda ash supply remains abundant (China inventory at 1.5 million tonnes), keeping prices near record lows in import-dependent markets like India. |
| Geopolitical & Tariff | US tariffs on SE Asian solar glass have disrupted glass trade flows, indirectly reducing regional soda ash demand and causing regional inventory gluts. |
| Input Costs | Fixed costs in the US have risen by $15M over 5 years, while gas and coal costs remain significantly higher than pre-COVID levels ($5/tonne coal escalation). |
Q&A Highlights
US Margin Outlook
- Question: When will US margins normalize given current losses on exports? (Saurabh Jain)
- Answer: Domestic realizations are stable (only $5 down). The loss is concentrated in SE Asian exports where pricing is <$160. Management is rejecting orders below fair contribution, which may lead to lower temporary volumes but better mix (R. Mukundan).
China Capacity Addition
- Question: What is the impact of the 2.5–2.8 million tonne capacity addition in China? (Abhijit Akella)
- Answer: This is part of China’s plan to reach 50% natural soda ash. While new low-cost capacity is coming online, high-cost synthetic plants are currently losing money and will likely face rationalization (R. Mukundan).
UK Turnaround
- Question: Why has the UK turnaround to the guided ₹250cr EBITDA been delayed? (Nitesh Dhoot)
- Answer: One-off snowstorm impacts caused production issues. Fixed cost savings are on track, but the turnaround is delayed by roughly six months. Full contribution from pharma salt is expected next year (R. Mukundan).
Key Takeaway
Tata Chemicals reported a challenging Q3 FY26, characterized by a consolidated loss of ₹15 crores (pre-exceptional) as global soda ash prices approached record lows. While standalone India operations remained resilient with 9% EBITDA growth and strong silica volumes, the consolidated performance was dragged down by the US export vertical, where pricing in Southeast Asia collapsed due to Chinese oversupply and US tariff shifts. Strategically, the company is pivoting away from cyclical commodities, focusing its ₹1,425 crore India CAPEX on salt, bi-carb, and silica, while successfully reconfiguring the UK business toward specialty pharma salts. Management has adopted a “value over volume” stance in the US, halting low-margin shipments to preserve cash. Looking ahead, while near-term pricing remains under pressure from Chinese capacity additions, the focus stays on cost discipline, non-cyclical growth in India, and achieving a UK turnaround by FY27.
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