Tatva Chintan Pharma Chem witnessed a strong demand for its initial public offering (IPO) on its first day. The IPO was fully subscribed within the first few hours of opening. The public issue saw a subscription of 4.50 times on July 16. Investors had placed their bids for 1.46 crore equity shares against the IPO of 32.61 lakh equity shares as per information from the exchange. The IPO is worth around Rs 500 crore with a fresh issue of Rs 225 crore and an Offer for Sale (OFS) worth Rs 275 crore according to reports by promoters and promoter groups. The shareholdings are set to be reduced to 79.2 per cent after the issue closes. The offer which opened on July 16 is set to close on July 20.
The retail investor segment saw a significant demand from the chemical company as they had subscribed 8.23 times to their reserved portions. The company managed to mobilise Rs 150 crore from the total issue size via its anchor booking that took place a day prior to opening, on July 15. This was at the higher end of the allocated price band which stood at Rs 1073 per equity share to 1083 per equity share. The face value of this public issue stands at Rs 10 per equity share.
The company will most likely seek an allotment date that is set on July 26, while eyeing a listing date for July 29 for the public issue as per reports.
According to market analysts, Tatva Chintan IPO Gery Market Premium (GMP) stood at a healthy Rs 710 to Rs 720. As such, Tatva Chintan’s shares were being made available in the grey market at a premium of Rs. 710 to Rs. 720. This indicated a robust standing of 66 per cent in the grey market – a good indicator of what followed on the first day of the public issue opening.
Yash Gupta, Equity Research Associate, Angel Broking Ltd was quoted saying, “Company will utilise a fresh issue of ₹225 crores to fund its Capex plans like Dahej manufacturing plant and upgrade its R&D Vadodara facility.” He added that the company has been promoted by Ajaykumar Mansukhlal Patel, Chintan Nitinkumar Shah and Snehkar Rasiklal Somani.
The company having been incorporated in 1996, is a speciality chemical manufacturing company engaged in manufacturing a wide range specality chemicals. These include Structure Directing Agents (SDAs), Phase Transfer Catalysts (PTCs), Electrolyte Salts and Pharmaceutical & Agrochemical Intermediates as well as Other Specialty Chemicals (PASC). Tatva Chintan also reported impressive financials over the past two years as per a note by Reliance Securities.
The company’s revenue has gained around 21 per cent CAGR over FY19-FY21, while the EBITDA stood at 44 per cent. The PAT recorded 60 per cent CAGR in the same window. It should also be noted that between FY19 and FY21 the EBITDA margin expanded from 16.6 per cent to 23.8 per cent
Gupta went on to say, “Company exports its products to more than 25 countries that includes USA,UK, China etc and 75% of the revenue comes from the Export market…we have a positive outlook towards the Tatva Chintan Pharma Limited IPO.”
In terms of analyst recommendations for the issue, the Reliance Securities note said, “We believe the company has a robust earnings growth potential in the long run led by strong market share, capacity expansion and long-standing relationship with the key customers. Hence, we recommend SUBSCRIBE to the IPO.”