Tatva Chintan IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Tatva Chintan IPO– Incorporated in 1996, Tatva Chintan Pharma Chem Limited is a specialty chemicals manufacturing company. It is engaged in the manufacture of structure directing agents (SDAs), phase transfer catalysts (PTCs), electrolyte salts for super capacitor batteries and pharmaceutical & agrochemical intermediates & other specialty chemicals (PASC).

Business — It is the largest and the only commercial manufacturer of SDAs for zeolites in India. It also enjoys the second largest position globally. It serves customers across various industries including automotive, petroleum, pharmaceutical, agro chemicals, paints and coatings, dyes and pigments, personal care and flavor & fragrances

Region of operation — The company exports most of its products to over 25 countries, including the US, China, Germany, Japan, South Africa and the UK

Revenue/Product Mix – India 28%, China 18%, US 15%, Others 39%

SDA 40%, PASC 31%, PTC 28%, Electrolyte Salts 1%

Offer purpose — The IPO is fresh issuance of shares worth ₹225 crore and an offer for sale to the tune of ₹275 crore by existing promoters and shareholders.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 research and development facility in Vadodara; and general corporate purposes.

Risks —

Revenue of 60% from Top 10 Customers leads to concentration risk

Highly competitive industry and well established peers like Aarti Industries Limited, PI Industries Limited, Fine
Organic Industries Limited, Delta Finochem, Dishman group

High Expenses on raw materials (~50% of total expenses)

Strength

It is the largest and the only commercial manufacturer of SDAs for zeolites in India. It also enjoys the second largest position globally
Marquee list of customers Bayer, Merck, Navin Flourine, Divis,SRF, Atul, Laurus.
Strong long-term relationship with key customers with 53% customers with it over 5 years
Consistent track record of financial performance.
International presence with export to several countries i.e. China, USA, Japan etc.

Future

Company has been growing well in revenue and profitability. Unique products and diversified portfolio may help the company to retain growth path. Competition is high and will increase in coming years. Expansion and investment into R&D will help company for next phase of growth

Valuations

Valuations are as per bull market and comparatively lesser than peers

Should we apply?

People can subscribe for long term and keep on adding on dips & review holdings with each quarter earnings

Expecting strong listing gains.

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