Tatva Chintan Pharma IPO intends to raise Rs. 500 crore through fresh issue of shares worth Rs 225 crore and an offer for sale of shares worth Rs 275 crore by the promoter and promoter group. The Gujarat based specialty chemical company, Tatva Chintan Pharma has set a price band of Rs 1,073 – Rs 1,083 per equity share. The fresh issue proceeds will be utilised for expansion of the Dahej manufacturing facility, and upgradation of the R&D facility in Vadodara.
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Tatva Chintan Pharma IPO Details:
| Issue Period | 16th July- 20th July, 2021 |
| Issue Details | Fresh Issue of Equity Shares upto ₹ 225 Cr + OFS upto Rs.275 Cr |
| Issue Size (No. of Shares) | Approx. 4,659,831~ – 4,616,804^ Equity Shares |
| Issue Size (₹ Cr) | ₹ 500 Cr |
| Price Band | ₹ 1,073 – 1,083 |
| Bid Lot | 13 Shares |
| Issue Structure : | |
| QIB | 50% of the net offer |
| NIB | 15% of the net offer (₹ 75 Cr) |
| Retail | 35% of the net offer ( – 1,615,882 Shares , ₹ 175 Cr) |
| Applications for 1x retail | 1.24 Lacs |
| BRLM | ICICI Securities, JM Financial |
| Registrar | Link Intime India Pvt. Ltd. |
Updates :
- ANCHOR ISSUE: Ahead of its IPO, Tatva Chintan Pharma raised Rs 150 crores from 22 anchor investors at the upper price band of ₹1083 per equity share. Goldman Sachs India Ltd, Abu Dhabi Investment Authority, Aberdeen Standard Asia Focus Plc, Malabar India Fund Ltd, Nippon Life,, Axis Mutual Fund, ICICI Prudential MF, HDFC MF, SBI MF, Aditya Birla Sun Life MF and SBI Life Insurance Company are among the anchor investors who participated in the anchor book.
About Tatva Chintan Pharma
- Tatva Chintan Pharma Chem Limited was incorporated on June 12, 1996.
- Tatva Chintan Pharma is a specialty chemicals having a diverse portfolio of
- structure directing agents (“SDAs”)
- phase transfer catalysts (“PTCs”)
- electrolyte salts for super capacitor batteries
- pharmaceutical and agrochemical intermediates and other specialty chemicals (“PASC”).
- Tatva Chintan is the largest and only commercial manufacturer of SDAs for zeolites in India.
- As on March 31, 2021,Tatva Chintan Pharma manufactured over 154 products. Out of these
- 47 products under their SDA
- 48 products under the PTC product portfolio
- 6 products under the electrolyte salts for super capacitor batteries
- 53 products under their PASC portfolio.
- The company currently operates through 2 manufacturing facilities
- situated at Ankleshwar and Dahej in Gujarat. Also, they have set up
- wholly owned subsidiaries in USA and Netherland as their marketing &
- distribution arms which allow it to cater to the demand of the domestic
- as well as international market.
- Tatva Chintan Pharma supplies their products to customers in India and also exports their products to over 25 countries, including the USA, China, Germany, Japan, South Africa and UK.
Tatva Chintan Pharma IPO: Financials
| Particulars / (₹ In Cr) | 2021 | 2020 | 2019 |
| Revenue from Operations | 300.36 | 263.24 | 206.31 |
| Revenue Growth (%) | 14.10% | 27.59% | – |
| EBITDA as stated | 71.64 | 56.34 | 34.3 |
| EBITDA (%) as stated | 23.85% | 21.40% | 16.63% |
| Profit Before Tax | 60.7 | 47.6 | 27.39 |
| Net Profit for the year | 52.26 | 37.79 | 20.54 |
| Net Profit Margin | 17.40% | 14.36% | 9.96% |
| Equity Share Capital | 20.09 | 8.04 | 8.04 |
| Reserves | 145.88 | 109.66 | 71.67 |
| Net worth as stated | 165.96 | 117.69 | 79.7 |
| NAV(₹ ) | 82.62 | 58.59 | 39.68 |
| ROE (%) | 31.49% | 32.11% | 25.78% |
| ROCE (%) | 32.98% | 31.96% | 26.36% |
| EPS (₹ ) | 26.02 | 18.81 | 10.23 |
| FV | 10 | ||
| Equity Post IPO | 22.17 | ||
| IPO Price | 1083 | ||
| EPS (Post IPO) FY21 | 23.57 | ||
| PE | 45.94 | ||
| Market Cap | 2401 | ||
| Market Cap / Sales | 8.0 |
Pros
- Leading manufacturer of structure directing agents and phase transfer catalysts, with consistent quality
- Global presence with a wide customer base across various industries having High entry barriers
- Diversified specialized product portfolio requiring strong technical know-how
- Modern manufacturing facilities with a focus on ‘green’ chemistry processes.
- The manufacturing facilities of Tatva Chintan Pharma employ various modern machinery and equipment, including reactors, assembly lines, ANFDs (Agitated Nutsche Filter Dryer), centrifuges and RCVDs(Rotary Conical Vacuum Dryers). These equipment enable facilities to undertake various chemistry processes, such as, quaternization, methylation, amination, phase transfer reactions, cyclization, halogenation, condensation, and electrolysis.
- Global market presence with customer base across industries.
- Strategically located manufacturing facility in Gujarat with close proximity to Hazira Port.
- Strong financial performance track record.
- Experienced Promoters with a strong management team
Cons
- The company operates in a hazardous industry and is subject to certain operational risks.
- The company is subject to quality requirements and strict technical specifications and audits by international customers.
Tatva Chintan Pharma IPO: Assessment
- Indian specialty chemical sector is expected to grow at 11.3% CAGR vs 5.3% globally as per F&S report. India’s chemical export is expected to grow at 13% CAGR
- Tatva Chintan Pharma is well placed to benefit from the growing anti-China sentiment as it gets a large portion of its revenue from exports to countries that seek to diversify their imports.
- Tatva Chintan Pharma is the largest producer of SDAs for zeolites in the country and the second-largest in the world. These are used in auto emission control. New emission norms in many countries are expected to benefit the company.
- About 70% of the company’s income is derived from exports to over 25 countries including the USA, China, Germany, Japan, South Africa, and the UK.
- Tatva Chintan Pharma’s total revenue has shown consistent growth from Rs 206.3 crore in FY19 to Rs 263.2 and Rs 300.4 in FY20 and FY21 respectively. Company’s Profit after tax has increased more than 2.5 times between FY19 and FY21, and stands at Rs 52.3 crore.
- Proceeds from the fresh issue would be used towards funding capital expenditure requirements for expansion of the company’s Dahej manufacturing facility; up-gradation of an R&D facility in Vadodara; and general corporate purposes.
- Tatva Chintan Pharma enjoys full income tax holiday for Dahej SEZ plant, which accounts for 2/3rd of its present capacity, till FY22 and it enjoys 50% tax holiday till FY27 due to which its effective tax rate is low at 14% for FY21.
- Tatva Chintan Pharma has a strong focus on ‘green’ chemistry processes, eco-friendly and environmentally sustainable initiatives.
- Tatva Chintan Pharma IPO was last reported to be commanding a GMP of about Rs. 600.
- Tatva Chintan Pharma IPO is being made at around 45.94 x based on earnings for the period ended March 31, 2021 and on the post IPO equity share capital of Rs 22.17 crore of Rs. 10 FV.
- Company’s listed peers like Aarti Industries, Navin Fluorine International, Alkyl Amines Chemicals, Vinati Organics and Fine Organics are commanding higher PE. Compared to peers it has shown he higher CAGR earnings growth (62% CAGR) for the period FY 2018-2021.
- I intend to apply in Tatva Chintan Pharma IPO. The company should do well on account of its expansion plans and looks a good opportunity in the fast growing specialty chemical sector. Further the company has focus on green chemistry, product innovation and has good R&D capabilities.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.