Specialty chemical manufacturing company Tatva Chintan Pharma Chem Ltd, (TCPCL) is among the key players in the specialty chemicals segment, with its range of products finding applications among the high growth segments. Engaged in manufacturing of a variety of disinfectants, catalysts, agro and pharmaceuticals intermediates and other specialty intermediates. It has a good product mix across sectors of Agrochemicals, pharmaceuticals, personal care, etc.
TCPCL is the largest and the only manufacturer of SDAs (40 percent of revenue) for Zeolites in India while it is the 2nd largest globally. In case of PTC (27 percent), it is the largest producer in India and one of the global leaders. The SDA and PTC products have various applications in green chemistry, which is gaining prominence considering the growing focus on green and sustainable technologies. TCPCL derives 71 percent of its revenue from exports where multiple opportunities are emerging
The company is bringing the issue at price band of Rs 1073-1083 per share at p/e multiple of 42.06 on post issue FY21 basis. It is being one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe with wide customer base has strong future prospects.
It has a strong clientele. It has been able to increase its total revenue and profit after tax from fiscal 2019 to fiscal 2021 at a CAGR of 21.70 percent and 59.50 percent respectively. Its EBITDA has grown to Rs 716.35 million for fiscal 2021 from Rs 342.96 million for Fiscal 2019. In the fiscals ended 2019, 2020, and 2021, company’s ROCE was 26.36 percent, 31.96 percent, and 32.98 percent, respectively. In the Fiscals ended 2019, 2020, and 2021, company’s ROE was 25.78 percent, 32.11 percent, and 31.49 percent respectively.
Motilal Oswal said, it likes TCPCL due its leadership position, wide product portfolio, strong client relationship and high entry barriers. The company is expected to witness strong growth for next 2-3 years given its expansion plans. It is well placed to tap opportunity in the fast growing specialty chemical space with increasing focus on green chemistry by leveraging its strong R&D capabilities. The issue is valued at 45.9x FY21 P/E on post issue basis, which appears reasonable compared to peers (avg. P/E of 59x), as it enjoys higher earnings growth (62 percent CAGR vs. avg. 38 percent CAGR for peers over FY18-21).
Motilal Oswal said, "we recommend, 'Subscribe'.
Hem Securities said, looking at the company's financials and strong clientele, "We recommend Subscribe for listing gain and long-term purpose.
Ahead of its IPO today, Tatva Chintan Pharma Chem on Thursday said it has garnered Rs 150 crore from anchor investors ahead of its initial share sale, which will open for public subscription on Friday.
The company has decided to allocate 13,85,040 equity shares at Rs 1,083 apiece to anchor investors, aggregating the transaction size to Rs 150 crore, a circular uploaded on the BSE website showed.