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Recommendation - Long Term Investment and Good Listing Gains*
Issue Opens - 16th July, 2021 (Friday)
Issue Closes - 20th July, 2021 (Tuesday)
Issue Size - Rs 500 crore (At Upper Price Band)
Fresh Issue -Eq Shares of ₹10
(aggregating up to ₹225.00 Cr)
Offer for Sale - Eq Shares of ₹10
(aggregating up to ₹275.00 Cr)
Price Band - Rs 1073-1083
Face Value - Rs 10
Minimum Lot Size - 13
Minimum App Amount - Rs 14079/ at Upper End
Objective of the Issue
The net proceeds from the IPO will be utilized towards the following objectives;
-Funding organic and inorganic growth initiatives.
-Meet general corporate purposes.
Who are selling in IPO
The offer for sale consists a selling of Rs 23.3 crore by Ajaykumar Mansukhlal Patel, Rs 81.4 crore by Chintan Nitinkumar Shah, Rs 73 crore by Shekhar Rasiklal Somani, Rs 10.3 crore by Darshana Nitinkumar Shah, Rs 34.2 crore by Priti Ajaykumar Patel, Rs 34.2 crore by Ajay Mansukhlal Patel HUF, Rs 11 crore by Kajal Shekhar Somani, Rs 1.1 crore by Shitalkumar Rasiklal Somani, and Rs 6.5 crore by Samirkumar Rasiklal Somani.
Who are Promoters of the Company
The company is promoted by Chintan Shah, Ajay Patel and Shekhar Somani, each of them has over 24 years in the specialty chemicals manufacturing industry and has established strong business relationships with domestic as well as overseas customers.
Chintan Nitinkumar Shah is the Managing Director on the board. He holds a bachelor's degree in engineering, with a specialisation in computer science from the Maharaja Sayajirao University of Baroda. He has over 24 years of experience in the specialty chemical manufacturing industry.
Ajaykumar Mansukhlal Patel and Shekhar Rasiklal Somani are Whole Time Directors on the board. Manher Chimanlal Desai, Subhash Ambubhai Patel, and Avani Rajesh Umatt are independent directors on the board.
Company Background
Incorporated in June 1996, Tatva Chintan is a specialty chemicals manufacturing 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 pharmaceutical and agrochemical intermediates and other specialty chemicals (PASC).
It is the largest and only commercial manufacturer of SDAs for zeolites in India. It also enjoys the second largest position globally. In addition, it is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe. As on March 2021, the company manufactured over 154 products across four broad categories.
Product wise Revenue Contribution
SDA (structure directing agents) - 40%
PTCs (phase transfer catalysts) - 27%
Electrolyte salts - 1%
PASC (pharmaceutical and agrochemical intermediates and other specialty chemicals) - 32%
Marquee Clients
Its clientele includes Merck, Bayer AG, Asian Paints, Ipox Chemicals, Laurus Labs, Tosoh Asia, SRF, Navin Fluorine, Oriental Aromatics, Atul Ltd., Otsuka Chemical, Meghmani Organics, Divi’s Laboratories, Hawks Chemical, Firmenich Aromatics, Jiangsu Guotai Super Power New Materials and Jade Chem.
Manufacturing Facilities
Tatva Chintan has two manufacturing facilities situated at Ankleshwar and Dahej in Gujarat, with an annual installed reactor capacity of 280 kilo liters and 17 assembly lines. In order to capitalize the growth opportunities in the specialty chemicals, the company is planning to add capacity at the Dahej facility, following which the installed capacity will enhance by 200 kilo liters and 14 assembly lines.
Financials
(Rs Cr)
FY19 FY20 FY21
Revenue 207 265 306
EBITDA 34 55 66
PAT 21 38 53
ADJ EPS (Rs) 9.3 17 23.6
Margins FY19 FY20 FY21
EBITDA Margin(%) 16.4% 21% 22%
Return:-
FY19 FY20 FY21
RoE 26% 32% 31.5%
ROCE 20% 26% 27%
Growth
During fiscal FY19-FY21, Tatva Chintan recorded growth in revenue at a CAGR of 20.7 percent and profit at a CAGR of 59.5 percent. During the same period, earnings before interest, tax, depreciation and amortisation (EBITDA) grew at a CAGR of 39.4 percent.
Recommendation
With focus shifting from China to India, Tatva Chintan is well poised to grow leaps and bound. Also it is largest player is SDA segment.
We recommend one should apply for Tatva Chintan IPO.
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