Tatva Chintan Pharma Chem Limited

Incorporated in 1996, Tatva Chintan Pharma Chem Limited is a specialty chemicals 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 pharmaceuticals and agrochemical intermediates and other specialty chemicals (PASC). The company currently operates through two manufacturing facilities situated at Ankleshwar and Dahej in Gujarat, both of which are strategically located very close to the Hazira port.These manufacturing facilities have an annual installed reactor capacity of 280 KL and 17 Assembly Lines, as on March 31, 2021. Apart from company's customers in India, the company also export company's products to over 25 countries, including the USA, China, Germany, Japan, South Africa, and the UK. Company's manufacturing facilities employ various modern machinery and equipment, including reactors, Assembly Lines, ANFDs, centrifuges and RCVDs. These equipment enable company's facilities to undertake various chemistry processes, such as, quaternization, methylation, amination, phase transfer reactions, cyclization, halogenation, condensation, and electrolysis. As on March 31, 2021, the company manufactured over 154 products which can be divided into the following four broad categories:1. Structure Directing Agents2. Phase Transfer Catalysts3. Electrolyte salts for super capacitor batteries4. Pharmaceutical and agrochemical intermediates and other specialty chemicals As per financial performance, Tatva Chintan Pharma has posted total income/net profits (loss) of Rs. 137.28 cr. / Rs. 12.28 cr. (FY18), Rs. 206.80 cr. / Rs. 20.50 cr. (FY19), Rs. 264.62 Cr. / Rs. 37.63 Cr. (FY20) and Rs. 306.29 Cr. / Rs. 52.40 Cr. (FY21). So company has posted consistent high growth. Company has posted an average EPS of Rs. 20.99 and average RoNW of 30.75% for last three fiscals. Issue is priced at a P/BV of 13.11 as per NAV of 82.62 on 31.03.21. As per FY21 earnings and on post issue diluted equity post issue, P/E is around 46. As per RHP, the listed peers are shown in above table. On BRLM's front, two BRLMs are associated with this IPO, and have handled around 37 IPO in last three fiscals. From last 10 IPOs, 3 are opened below issue price and remaining are opened above issue on the day of listing. As of now, 2 is trading below issue price and remaining are trading above issue price. ( As on 13.07.21) As per financials, company has shown good growth, RoNW is 31.49% and P/E is around 46 as per FY21 earnings on post issue equity. Post pandemic speciality chemical sector has outperformed the market as GoI is very keen on Make In India for this sector and the sector will show good growth in next 3-5 years. Performance of BRLM is good. So, we are giving SUBSCRIBE rating to this IPO for listing gains and investors may keep it in portfolio for long term also.

• 1 Ajaykumar Mansukhlal Patel 
• 2 Chintan Nitinkumar Shah
• 3 Shekhar Rasiklal Somani