Tatva Chintan Pharma Chem Ltd’s Rs 500-crore initial public offering (IPO) continued to witness huge interest from the investors on the third day of bidding. The issue was subscribed 15.04 times on July 19, the second day IPO subscription. Tatva Chintan Pharma Chem IPO has received bids for 4.90 crore equity shares, on Day 2, according to the the subscription data. The issue received applications for 4,90,84,165 shares against on offer 32,61,882 shares on the second day. The portion set aside for retail investors has been subscribed 23.73 times. The non-institutional investors have subscribed the issue 12.21 times while Qualified institutional buyers have put in bids 1.96 times on the second day. The was subscribed 4.5 times on the first day of bidding.
Started in 1996, Tatva Chintan Pharma Chem Limited is a chemical manufacturing company is one of the leading global producers of an entire range of phase transfer catalysts (PTCs) in India. It manufactures structure directing agents (SDAs), PTCs, pharmaceutical and agrochemical intermediates, and other specialty chemicals. The company aims to raise Rs 500 crore through its offer comprising a fresh issue of Rs 225 crore and an offer for sale of Rs 275 crore by shareholders. Tatva Chintan Pharma Chem already received a bid worth Rs 150 crore from anchor investors on July 15, at the higher end of the Rs 1,073-1,083 price brand.
Most analysts and brokerage firms have advised to subscribe Tatva Chintan Pharma Chem IPO. The price band has been fixed at Rs 1,073-1,083 a share. Investors can bid for a minimum of 13 shares and in multiples there after. One can bid for a maximum of 14 lots.
The grey market premium of Tatva Chintan Pharma Chem remain sturdy on the third day of bidding. It is likely to receive solid interest from buyers when it will the primary market. The issue is demanding a premium of Rs 770 in the unofficial market on July 20.
The chemical company is expected to finalise the IPO share allotment on July 26. The investors are likely to get refunds on July 27. The trading in equity shares will commence with effect from July 29.
Tatva Chintan Pharma Chem is the largest and only commercial manufacturer of SDAs for zeolites which is used as a catalyst in several important chemical reactions, in India. Globally, it is the second largest manufacturer of SDAs. It has a strong customer relationship with marquee players like Merck, Bayer AG, Asian Paints Ltd. etc.
Revenue grew at 21% CAGR over FY19-21 driven by higher sales from SDAs and PASCs while PAT growth stood at 60% CAGR led by strong earnings outlook and better operating performance. It has a healthy balance sheet position with lower D/E ratio of 0.54x as of FY21. Moreover, RoE remains healthy at 32% in FY21.
“At the upper price band of Rs1,083, TCPCL is available at a P/E of 46x (diluted) which appears to be reasonably priced. We assign a “Subscribe” rating for the issue on a short to long-term basis considering its strong focus on R&D, promising sector outlook, cost control initiatives and longstanding relationship with key customers,” said Geojit in a report.
“Most of the products of Tatva Chintan IPO are more inclined towards green chemistry applications, which not only brings efficiency to the process in hand but helps in reduction or eliminates use of expensive or dangerous solvents and also helps in reducing residual or industrial wastes. It is well placed to capture the growth is specialty chemicals space, as it offers solutions through green chemistry applications through its leadership position in the given segments and are capable to offer new products through enhanced thrust on R&D capability. The financial numbers offer credence with Revenue or EBITDA or PAT CAGR of 21% or 39% or 60% over FY19-21 and return ratios in excess of 20%,” said Hemang Kapasi, head of equities, Sanctum Wealth Management.