Shares of Tata Chemicals crashed heavily on Monday morning going down over 8%. The crash comes as the Tata Chemicals share price surged up over 35% last week.

What Happened: The crash comes as media reports stated that the Tata Sons IPO might not happen. The news has resulted in heavy correction in most Tata Group stocks including Tata Consumer and Tata Motors.

Kotak Securities in its latest note on the stock maintained its “sell” rating with a target price of ₹780. The target indicates around 40% from the stock’s last closing price of ₹1,315 (35% from the current market price of around ₹1,200). On the recent news the brokerage said that recent news reports that state Tata Sons is evaluating options to avoid an IPO should deflate speculation around value-unlocking at Tata Chemicals.

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The analysts noted that as of February 2024, the import prices of soda ash into India continue to linger at low levels, indicating a challenging outlook for the industry. In the fourth quarter, the outlook remains weak for the chemicals giant, exacerbated by the full impact of contract renegotiations.

This trend is concerning, particularly given the influx of new capacities, notably from China. The Tata Sons IPO news poses a challenge for Tata Chemicals Limited (TCL) in unlocking the value of its stake in Tata Sons.

Price Action: Tata Chemicals’ share price was down 8.50% to trade at ₹1,203.40 shortly after market open on Monday.

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