TATVA CHINTAN PHARMA CHEM IPO

IPO Details:

Price Band: 1073-1083

Cutoff Price: 1083

About Company:

Tatva Chintan are a specialty chemicals manufacturing company engaged in the manufacture of a diverse portfolio of structure directing agents (“SDAs”), phase transfer catalysts (“PTCs”), electrolyte salts for super capacitor batteries and pharmaceutical and agrochemical intermediates and other specialty chemicals (“PASC”). The company is the largest and only commercial manufacturer of SDAs for zeolites in India. It also enjoys the second largest position globally. In addition, the company is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe. As a manufacturer of specialty chemicals, company focus on application of their products, which form a key ingredient to customers’ manufacturing and industrial processes. For instance, SDA and PTC products have various applications in green chemistry, which is pertinent in considering the growing focus on green and sustainable technologies. They continuously strive to improve their processes and infrastructure to help reduce impact on the environment and have accordingly undertaken various ‘green’ chemistry processes such as electrolysis. Considering the wide application of our products, we serve customers across various industries, including the automotive, petroleum, pharmaceutical, agro chemicals, paints and coatings, dyes and pigments, personal care and flavour and fragrances industries. Apart from customers in India, company also export their products to over 25 countries, including the USA, China, Germany, Japan, South Africa, and the UK.

Competitive Strengths:

1. Leading manufacturer of structure directing agents and phase transfer catalysts, with consistent quality;

2. Global presence with a wide customer base across various industries having high entry barriers;

3. Diversified specialised product portfolio requiring strong technical know-how;

4. Modern manufacturing facilities with a focus on ‘green’ chemistry processes;

5. Strong R&D capabilities;

6. Experienced Promoters with a strong management team;

7. Robust Financial Performance.

Strategies:

1. Expand existing product portfolio;

2. Further develop R&D capabilities;

3. Increase wallet share with existing customers and continued focus to expand customer base;

4. Expand existing manufacturing capacities to capitalise on industry opportunities.

Financial Performance:

Company revenue, net profit and EPS are positive and increasing year on year. With current EPS of 26.02 for financial year 2021, PE of the Tatva Chintan is 41.62.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Offer for Sale

2. Fresh Issue for funding capex

Competitors Comparison:

Tatva Chintan IPO seems to be undervalued based on the P/E ratio and price to book value ratio. There are less listed competitor for Tatva Chintan.

Grey Market Premium:

Our view: GMP of the stock is decent and also the stock is fairly valued after comparing it with listed competitors. We can expect this IPO to list at premium and hence I would be applying for this IPO for listing gains.

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Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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