Fitch Ratings on March 13 said that it has revised the outlook on Tata Chemicals Limited's (TCL) to positive from stable and affirmed the rating at 'BB+'
"The revision is due to our expectation that Tata Chemicals' net earnings before interest, taxes, depreciation,
and amortization (EBITDA) leverage will remain below 2x over the financial year ending March 2023 (FY23) to FY26," the ratings agency said in a statement.
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Fitch also mentioned that it expects the Tata Group company's free cash flow margin to improve over FY24-FY26, from an average of -2.5 percent in FY19-FY23, despite high average capex intensity of 10 percent
Tata Chemicals could generate better free cash flow than the forecasts through stronger-than-expected earnings and/or prudent management of its capex programme, which is reflected in the ratings agency's outlook, Fitch added.
Commenting further, the agency said Tata Chemicals' cash flows have 'remained resilient' in recent years despite the pandemic-induced demand shock and rising energy costs amid geopolitical pressure
notwithstanding its smaller scale, which is due to the soda ash sector's smaller market size than other chemical and commodity sectors.
A study found that taking a hot bath about 90 minutes before bed could help people fall asleep more quickly.
Fitch also added, "We believe that TCL's leading market position,
cost-competitive operations and the sector's end-market diversification mitigate the risks to its credit profile from its smaller EBITDA scale versus 'BBB-
rated chemical industry peers, which Fitch regarded as a drag on its rating in the past."
Meanwhile, shares of Tata Chemicals on March 13 closed 1.65 percent lower at Rs 964.75 apiece on BSE on a day when Indian bourses - Sensex and Nifty- sank to 5-month low,
wiping out Rs 4 lakh crore of investor wealth due to global cues concerning the fallout of Silicon Valley Bank (SVB) last week.
The Sensex closed 897 points lower at 58,237.85. The Nifty slid 258.60 points at 17,154, marking a five-month low. All sectoral indices ended the day in the red with the fear gauge index or India VIX zooming over 21 percent.