Tatva Chintan Pharma IPO – Should you invest or avoid?
Tatva Chintan Pharma Chem is coming up with IPO which would open for subscription on 16th July 2021. Tatva Chintan Pharma Chem Limited is one of the leading specialty chemicals manufacturing company in India. Company generated strong revenue and margin growth in the last 3 years. You might be wondering whether you should invest in this IPO or avoid. Your decision to buy or not for any IPO would depend on the company fundamentals and the IPO Price valuations. In this article, we would provide Tatva Chintan Pharma IPO details, Promoter’s information, objects of the issue, Reasons to invest, Risk Factors and complete Review and Analysis.
About Tatva Chintan Pharma Chem Limited
It is a specialty chemical manufacturing company which is engaged in the manufacture of a diversified portfolio of structure of direct agents (SDAs), phase transfer catalysts (PTC), electrolyte salts for super capacitor batteries and pharmaceutical and agrochemical intermediates and other specialty chemicals.
Company is the largest and only commercial manufacturer of SDAs for zeolites in India.
Tatva Chintan Pharma IPO date and issue details
IPO Dates: IPO would open for subscription on 16th July 2021 and closes on 20th July 2021.
Face value: Rs 10 per equity share
IPO Price Band: Rs 1,073 – Rs 1,083 per share
Market Lot: 13 shares
Minimum Order Quantity: 13 Shares
Minimum Investment: Rs 13,949 on lower price band and Rs 14,079 on higher price band
Total Issue Size: Rs 500 Crores (Offer for Sale Rs 275 Crores and Fresh issue Rs 225 Crores)
Listing on: BSE and NSE
Tatva Chintan Pharma Chem Limited competitive strengths
1) Company is the leading manufacturer of structure directing agents and phase transfer catalyst.
2) It has diversified product portfolio.
3) It has global market presence with customer base across industries.
4) Company is strategically located manufacturing facility in Gujarat with proximity to Hazira Port.
5) It has experienced promoters and managers team.
6) Company has Strong financial performance track record.
Tatva Chintan Pharma IPO DRHP Link
Tatva Chintan Pharma IPO RHP Link
Objects of the IPO
It has two objects of the offer:
1) Offer for Sale (OFS) Rs 275 Crores: Under OFS selling shareholders would sell the shares and company would not get any proceeds from the issue.
2) Fresh issue of Rs 225 Crores:
i) Funding capital expenditures requirements for expansion of Dahej manufacturing facility.
ii) Funding capital expenditures requirements to upgrade R&D facilities in Vadodara.
iii) To meet general corporate purposes.
Company promoters and Financial Performance
Ajaykumar Mansukhlal Patel, Chintan Nitinkumar Shah, and Snehkar Rasiklal Somani are the company promoters.
Let us check the revenue and profit details from Tatva Chintan Pharma financial statements for the past 3 years.
| Period ending | Total Revenues (Rs in Mns) | Profits after tax (Rs in Mns) |
Profit % |
|---|---|---|---|
| Mar-18 | 1,372.8 | 122.8 | 8.9% |
| Mar-19 | 2,068.0 | 205.4 | 9.9% |
| Mar-20 | 2,646.2 | 377.8 | 14.3% |
| Mar-21 | 3,062.9 | 522.6 | 17.1% |
What we like in Tatva Chintan Pharma Chem IPO?
Here are the positive factors what we liked in this company.
1) Company has posted strong revenue growth in the last 3 years. Company revenues increased from Rs 137.28 Crores in FY2018 to Rs 306.29 Crores in FY2021.
2) Company has posted strong growth in margins in the last 3 years. Its margins improved from Rs 12.28 Crores in FY2018 to Rs 52.26 Crores in FY2021.
3) Tatva Chintan Pharma is the leading specialty chemical manufacturing company and is the largest and only commercial manufacturer of SDAs in India. Company has diversified portfolio with global presence.
Risk Factors in Tatva Chintan Pharma IPO
1) Like any other company, the continuing impact of the outbreak of the Covid-19 could have significant effect on its operations and can negatively impact its business.
2) Any unplanned slowdowns or shutdowns in its manufacturing operations can affect its business.
3) They are subject to quality requirements and strict technical specifications and audits by its institutional customers. Any failure to comply with quality standards can affect its business
4) Increase in the cost of raw materials could have material adverse effect in its results of operations and financial conditions.
5) Company has global presence. Its business subjects to risks in multiple countries which could materially adversely affect its business, cash flows and operations of the company.
6) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Tatva Chintan Pharma IPO Schedule
| Offer Open | 16-Jul-21 |
| Offer close | 20-Jul-21 |
| Finalization of Allotment | 26-Jul-21 |
| Initiation of Refunds | 27-Jul-21 |
| Credit to Demat Account | 28-Jul-21 |
| IPO Shares Listing Date | 29-Jul-21 |
Price Valuations of Tatva Chintan Pharma Chem IPO
Tatva Chintan IPO Price band is Rs 1,073 to Rs 1,083.
1) On the upper price band of Rs 1,083 and EPS of Rs 26.02 for FY21, the P/E ratio works out to be 41.6x.
2) For the last 3 years average EPS of Rs 20.99, the P/E ratio is 51.6x.
3) Means, the company is asking price of Rs 1,083 on the upper price band in the P/E range of 41.6x to 51.6x.
5) There are listed peers like Vinati Organics where it is trading at P/E 77x (Highest) and Alkyl Amines at P/E of 25x (Lowest) and industry average P/E is 56x.
Hence Tatva Chintan Pharma Share Price of Rs 1,083 of upper price band is reasonably priced.
What is the Grey Market Premium (GMP) today?
Tatva Chintan Pharma IPO GMP today is at Rs 540 per share. GMP is nothing but the premium at which the shares are trading in offline market.
GMP as per Eagle Eye IPO Guru on Chittorgarh – Rs 540 +/- 2 (per share)
GMP as per Top10stockbroker – Rs 480 per share
GMP as per IPO Watch – Rs 480 per share.
GMP as per IPO Central – Rs 480 per share
GMP as per Chanakyanipothi – Rs 500 per share
However, Tatva Chintan pharma IPO GMP as per ProfitMust is much higher at Rs 605 per share.
Also Read: These 5 midcap multibagger stocks gave high returns in last 1 year
Should you invest in Tatva Chintan Pharma IPO?
Tatva Chintan Pharma is the leading specialty chemical manufacturing company in India. It has diversified portfolio.
Company generated strong revenue growth in the last 3 years.
Company’s margins have improved significantly in the last 3 years.
Tatva Chintan Pharma IPO price is reasonably priced.
Considering all these positive factors, investors can subscribe to this IPO for short term to long term perspective.
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Your articles are lucid, very informative, useful and crisp.
Keep Going.
Thank you Sridhar
Thanks for including GMP also sir per request..
Thank you Vignesh. When there is authentic info, I generally include, else I would avoid.
Good evening Suresh ji,
You mean as per Gray Market premium(GMP) Ttva Chintan share will list first day at Rs.1583 (Rs.1083+ 500 GMP)if GMP predicted of Rs.500. Have I understood correctly?
Warmly
Sanjeev
Sanjeeva, GMP does not mean it would get listed with such premium price. It is an indicative demand for unlisted shares in the open market and can give an indication whether such IPO can give listing gains or not. This is just an indication and may not be 100% correct. Lets wait for listing day
Typos in giving financial figures. You have given figures as crores whereas it should be in millions.
Thanks for highlighting. I just corrected.