Shares of Tata Chemicals surged 9% to Rs 1,042.55 in intraday trade on BSE on Wednesday after the company reported a strong 87% year-on-year rise in consolidated profit after tax (PAT) to Rs 641 for the June quarter (Q1FY23). The Tata group of companies posted a PAT of Rs 3.42 crore in the corresponding quarter of the previous fiscal.

The company’s reported operating income rose 34% year-on-year to Rs 3,995 crore in Q1FY23 compared to Rs 2,978 crore in Q1FY22. EBITDA margin for the quarter rose 520 basis points to 25.4% (an all-time high) due to lower electricity, fuel and freight costs.

Tata Chemicals said operating results reflected improved realisation, effective cost management and optimal capacity utilisation against challenging market conditions and rising input and energy costs. The growth of basic chemicals is mainly due to the vigorous promotion of soda ash in various regions.

The global demand environment for the company’s products and applications continues to improve. Management said that while this positive momentum is expected to continue in short to medium term, the environment on the input side, especially energy, remains at a high level, coupled with ongoing logistical challenges in the market.

The performance for the quarter was primarily driven by improvements in the realisation of soda ash across all regions, which led to strong revenue growth for the quarter. However, volume growth remained weak in the quarter, ICICI Securities said in a report.

Going forward, we expect the soda ash market to remain active due to some capacity closures in China and no significant increase in global soda ash capacity. On the other hand, the demand for soda ash and its prices may come under pressure soon as construction demand slows due to recession fears. The brokerage said this could hamper Tata Chemicals’ growth due to a higher base in the coming quarters.

The stock was up 8.5% at Rs 1,038 at 9.47 am, while the S&P BSE Sensex was down 0.20%. It hit a 52-week high of Rs 1,158 on October 18, 2021. OTC volumes more than tripled, with a total of 4.2 million shares changing hands on the NSE and BSE.