{"id":815,"date":"2021-07-15T12:21:12","date_gmt":"2021-07-15T12:21:12","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=815"},"modified":"2021-07-15T12:21:14","modified_gmt":"2021-07-15T12:21:14","slug":"tatva-chintan-pharma-will-hit-the-primary-market-on-july-16-should-you-subscribe","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/tatva-chintan-pharma-will-hit-the-primary-market-on-july-16-should-you-subscribe\/","title":{"rendered":"Tatva Chintan Pharma will hit the primary market on July 16. Should you subscribe?"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>The rising popularity of Zomato IPO has faded the expected introduction of specialty chemical manufacturing player: Tatva Chintan Pharma. Along with Zomato, the month of July has seen a lot of IPOs such as G R Infraprojects and Clean Science and Technology. Both have received tremendous response from investors. Tatva Chintan pharma is another specialty chemical manufacturer after Clean Science with the potential of gaining higher subscription from investors. With the intentions of raising fresh issue from the markets to augment its capital expenditure requirements, the issue deserves serious attention. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list\"><li><a href=\"#Tatva_Chintan_Pharma_Details\" title=\"Tatva\nChintan Pharma Details:\">Tatva\nChintan Pharma Details:<\/a><\/li><li><a href=\"#Composition_of_Issue_Size\" title=\"Composition\nof Issue Size\">Composition\nof Issue Size<\/a><\/li><li><a href=\"#About_the_Company\" title=\"About the\nCompany\">About the\nCompany<\/a><\/li><li><a href=\"#_Industry_Growth_Drivers\" title=\"&nbsp;Industry Growth Drivers\">&nbsp;Industry Growth Drivers<\/a><\/li><li><a href=\"#Peers_Comparison\" title=\"Peers\nComparison\">Peers\nComparison<\/a><\/li><li><a href=\"#Financials\" title=\"Financials\">Financials<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Tatva\nChintan Pharma Details:<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Issuer Company: Tatva Chintan Pharma Ltd.<\/li><li>Industry: \u00a0Specialty Chemicals<\/li><li>IPO Size: 500 cr.<\/li><li>Price Band: 1,073-1,083<\/li><li>Issue Open Date: 16 July, 21<\/li><li>Issue Close Date: 20 July, 21<\/li><li>Listing Date: 29 July, 21<\/li><li>Minimum Lot Size: 13 shares<\/li><li>Face Value: 10 Re. Per share<\/li><li>Employee Discount:\u00a0 NA<\/li><li>Retail Allocation: 35%<\/li><li>Listing Exchange: NSE, BSE<\/li><\/ul>\n\n\n\n<p>Must Read: <a href=\"https:\/\/www.invest19.com\/blog\/subscription-status-and-falling-grey-market-premium-of-zomato-ipo\/\">Subscription status and Falling Grey Market Premium of Zomato IPO<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Composition\nof Issue Size<\/strong><\/h2>\n\n\n\n<p>The issue size of 500 crores is a mix of fresh issue of Rs. 225\ncrores and offer for sale of Rs. 275 crore at the upper price band. <\/p>\n\n\n\n<p>Offer for Sale: The object of the Offer for Sale is to allow\nthe shareholders to sell an aggregate of up to 25,39,242 equity Shares held by\nthem. The company will not receive any proceeds from the Offer for Sale. <\/p>\n\n\n\n<p>Fresh Issue: The company has planned to raise fresh capital\ncomprising an aggregate of 20,77,562 equity shares having Face Value \u20b910\naggregating up to Rs. 225 Cr at the upper price band of Rs. 1,083. Out of the\nnet proceeds<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>An amount of Rs. 147.10 cr. will be allocated\nfor capital expenditure requirements to expand the Dahej Manufacturing Facility<\/li><li>An amount of Rs. 23.97 cr. will be utilized for\nupgradation at R&amp;D facility in Vadodara.<\/li><li>Rest will be utilized for general corporate\npurpose.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About the\nCompany<\/strong><\/h2>\n\n\n\n<p>Tatve Chintan Pharma is a specialty chemicals manufacturing\ncompany which is engaged in the manufacturing of a diverse portfolio of structure\ndirecting agents, phase transfer catalysts, electrolyte salts for super\ncapacitor batteries and pharmaceutical and agrochemical intermediates and other\nspecialty chemicals. As a B2B platform, the company focuses on application of\ntheir products which form a key ingredient for their customers\u2019 manufacturing\nand industrial processes. SDA and PTC products have various applications in\ngreen chemistry, which is pertinent considering the growing focus on green and\nsustainable technologies.<\/p>\n\n\n\n<p>Considering the wide application of products, the company\nserves customers across various industries, including the automotive,\npetroleum, pharmaceutical, agro chemicals, paints and coatings, dyes and\npigments, personal care and flavour and fragrances industries. Apart from our\ncustomers in India, Tatva Chintan is an also exporter to over 25 countries,\nincluding the USA, China, Germany, Japan, South Africa, and the UK.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">&nbsp;<strong>Industry Growth Drivers<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>As the progress trend of population in India\nand their dependency on FMCG and pharmaceuticals is growing faster the specialty\nchemicals industry is in a rising trend.<\/li><li>India is becoming a central manufacturing hub\nfor various specialty chemicals due to increasing restrictions in China to\ncombat pollution. This has made us a leading exporter.<\/li><li>China used to be the manufacturing hub but\nshift to India due to rising restrictions in China has opened various\nopportunities for Indian specialty chemicals.<\/li><li>Average labor cost of China is growing at a\nCAGR of 19-20% while a 4-5% CAGR has been recorded in India. This accounts for\nhigher operating margins in domestic companies.<\/li><li>Indian Government has taken a lot of\ninitiatives to push specialty chemicals industry such as \u2018Make In India\u2019\nprogram and \u2018Productivity Linked Incentives\u2019 Scheme.<\/li><li>100% Foreign Direct Investment (FDI) has been\npermitted by the government to support the production capacities.<\/li><li>Currently, the India\u2019s specialty chemical\nindustry accounts for $70 billion and studies from various institutions believe\nthat $100 billion valuation is not so far.&nbsp;\n<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Peers\nComparison<\/strong><\/h2>\n\n\n\n<p>The company will face tough competition from PI Industries, Aarti\nIndustries, Navin Fluorine, Atul Limited, Fine Organics, Alkyl Amines and SRF\nLimited. Listed peers have been the top performers in the last bull run. Out of\nthe listed peers, Navin Fluorine has highest net profit margins at 38% among\nthe listed peers. Whole sector is trading at high valuations and a similar behavior\nis expected for Tatva Chintan pharma. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Financials<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  Income Statement (In Millions)\n  <\/td><td>\n  FY21\n  <\/td><td>\n  FY20\n  <\/td><td>\n  FY19\n  <\/td><\/tr><tr><td>\n  Gross Operating Income\n  <\/td><td>\n  3062.92\n  <\/td><td>\n  2646.22\n  <\/td><td>\n  2068.01\n  <\/td><\/tr><tr><td>\n  Cost of Employee &amp; Inventory\n  <\/td><td>\n  1735.23\n  <\/td><td>\n  1532.96\n  <\/td><td>\n  1305.54\n  <\/td><\/tr><tr><td>\n  Other Expenses\n  <\/td><td>\n  611.34\n  <\/td><td>\n  549.91\n  <\/td><td>\n  419.51\n  <\/td><\/tr><tr><td>\n  EBITDA\n  <\/td><td>\n  716.35\n  <\/td><td>\n  563.35\n  <\/td><td>\n  342.96\n  <\/td><\/tr><tr><td>\n  Depreciation\n  <\/td><td>\n  67.32\n  <\/td><td>\n  47.93\n  <\/td><td>\n  40.18\n  <\/td><\/tr><tr><td>\n  Interest \n  <\/td><td>\n  42.07\n  <\/td><td>\n  39.45\n  <\/td><td>\n  36.34\n  <\/td><\/tr><tr><td>\n  Exceptional Items\n  <\/td><td>\n  &#8211;\n  <\/td><td>\n  &#8211;\n  <\/td><td>\n  7.49\n  <\/td><\/tr><tr><td>\n  Profit Before Tax\n  <\/td><td>\n  606.96\n  <\/td><td>\n  475.97\n  <\/td><td>\n  273.93\n  <\/td><\/tr><tr><td>\n  &nbsp;Tax\n  <\/td><td>\n  84.34\n  <\/td><td>\n  98.08\n  <\/td><td>\n  68.5\n  <\/td><\/tr><tr><td>\n  Profit After Tax\n  <\/td><td>\n  522.62\n  <\/td><td>\n  475.97\n  <\/td><td>\n  205.43\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Company has delivered a growth in revenues by 21.7% in last two years.<\/li><li>EBITDA margins of the company stood at 23.38%. <\/li><li>Company has a long term liability of 26.76 crores which is manageable. <\/li><li>Cash flows of the company are negative that can pose risk of raising funds for working capital requirements.<\/li><li>More than 60% of total cost is allocated to cost of raw materials.<\/li><li>Return on Equity is 31.49% while Return on Capital Employed is 33%<\/li><li>Considering the upper price band at Rs. 1,083 and FY21 Earning Per Share (EPS) of Rs. 26.02, the company is demanding a P\/E multiple of 41.65x, much lower than the Industry P\/E of 59.39x.<\/li><\/ul>\n\n\n\n<p>Also Read: <a href=\"https:\/\/www.invest19.com\/blog\/zomato-ipo-is-coming-soon-its-time-to-deep-dive-into-its-financials\/\">Zomato IPO is coming soon! It\u2019s time to deep dive into its financials.<\/a><\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 2,250<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"815\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">7    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>The rising popularity of Zomato IPO has faded the expected introduction of specialty chemical manufacturing player: Tatva Chintan Pharma. Along with Zomato, the month of [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/tatva-chintan-pharma-will-hit-the-primary-market-on-july-16-should-you-subscribe\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":816,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[70,2,7],"tags":[],"class_list":["post-815","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo","category-stock-market","category-investment"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=815"}],"version-history":[{"count":1,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/815\/revisions"}],"predecessor-version":[{"id":817,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/815\/revisions\/817"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/816"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}