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Electric Vehicle Value Chain Stock No.4 | Tata Chemicals Limited

Electric Vehicle Value Chain Stock No.4 | Tata Chemicals Limited | Yadnya Investment Academy

Published on 05 April 2021

In the Electric Vehicle Value Chain, we will take Tata Chemical Stocks as the fourth stock in the series. Tata Chemical Limited belongs to the chemical sector and in this blog, we will come to know that how this stock manages to take a position in this series.

Introduction:

Tata Group is focused on building an EV ecosystem by bringing its business together. In this ecosystem, Tata Group will be focusing on Electric Vehicles and Tata Power will be working on Charging Stations for EVs. Let’s see how Tata Chemicals will play its part in this ecosystem.

Valuation View:

From a Valuation point of view, Tata Chemicals is looking quite attractive.

Tata Chemicals have the following holdings: Tata Sons (2.5% stake), Rallis India (Rs. 2,000 Cr.), and Titan (Rs. 2,000 Cr.). These holdings of Tata Chemicals justify its current market valuation.

Role of Tata Chemicals in EV Value Chain:

  • Tata Chemicals is engaged in the recycling of Lithium-ion batteries. As of now, there is a greater focus on this business only in EV Segment.
  • Development of Electric Vehicles, Increased in use of mobiles and tablets has increased volumes of Lithium-ion battery in
  • So, the usage of Lithium-ion is not only limited to EVs but also extends to the usage in laptops, mobile, etc.
  • General companies focus on active material sourcing then manufacturing and other activities of batteries take place.
  • But Tata Chemicals is doing it differently by recycling critical materials from used batteries. This is a positive sign for the company.
  • The company recycles Cobalt under its brand Inspire Company. Recycling also gives metals in Lithium salts, cobalt, nickel, and manganese along with by-products like graphite, iron, copper, and aluminum.

Manufacturing capacity:

  • Tata Chemicals has set up a Manufacturing Plant of 127 acres in Dholera, Gujarat.
  • This plant is having a manufacturing capacity of up to 10 GW active cells per annum.
  • Also, the company is having an engineering center for batteries in Pune which is in collaboration with Tata Technologies.
  • By this Tata Technologies also become part of this EV Ecosystem of Tata Group.
  • Also, Tata Elxsi will have some role in software development in Tata Motors.
  • As the number of electric vehicles will increase on the road, Battery Recycling Volumes may also increase.
  • Real battery volumes may not come immediately and will at least take 5-6 years.

Conclusion:

Looking at the valuations and current strategy of the company, Tata Chemicals looks like a growth story of the next decade. The shifting will be an interesting thing to keep an eye on. One important thing to notice in EV segments is it is not about Active material source but recycling of used batteries will play an important role and Tata Chemicals looks well placed in that concern.

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