Tatva Chintan Pharma Chem Limited is all set for a stellar market debut on Thursday. The much-awaited stock will get listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on July 29. Bumper bidding for stocks, soaring premium at the grey market signal that the pharma stock may double the investor wealth when it opens on the bourses on Thursday.
Ahead of the listing, the grey market premium of the stock has increased to Rs 1,140-1,150 per share in the unofficial market. The unlisted stocks were trading at Rs 450-500 on the day of the IPO announcement. The surge in the grey market premium suggests that Tatva Chintan Pharma Chem stocks may list at over 105 per cent to its issue price of Rs 1,083.
Tatva Chintan Pharma Chem IPO was opened for subscription from July 16-20 at a price band of Rs 1,073-1,083 a piece. The chemical manufacturing 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. The issue received bids of over 58.83 crore shares against the total issue size of over 32.61 lakh shares, according to data available with the National Stock Exchange (NSE). The portion reserved for the qualified institutional buyers (QIBs) was subscribed 185.23 times while non institutional investors’ quota was booked 512.22 times. The shares allocated for retail individual investors (RIIs) was booked 35.35 times, the data showed. Ahead of the IPO, the Vadodara-based specialty chemical manufacturing firm had 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.
At the issue price, Tatva Chintan Pharma Chem share is demanding a PE of 41.62 times with a market cap of Rs 24,00.47 crore, while Aarti Industries and Navin Fluorine International Navin Fluorine are trading at a PE of 63x and 61.4x, respectively.
“If the stock gets listed at 80-90 per cent premium, even long-term investors should pare at least 50 per cent of their holdings. Investors investing with listing gains would anyway want to book profits on Day 1,” said Astha Jain of Hem Securities.
Tatva Chintan Pharma Chem Ltd is a specialty chemicals manufacturer, with a diverse portfolio of structure directing agents (SDAs; 40% of revenues), phase transfer catalysts (PTCs; 27%), electrolyte salts (ES; 1%) for super capacitor batteries (SCB) and pharmaceutical/ agrochemical intermediates and other specialty chemicals (PASC; 30%).
“Indian specialty chemical market is expected to grow at 11.3% CAGR over CY19-24E (F&S report) vs 5.3% globally. Further India’s chemical export is expected to grow at 13% CAGR (CY19-24E) vs China’s 7% due to China+1 strategy being adopted by majority of the global firms. TCPCL is well placed to capture this opportunity with niche and diversified product portfolio across various industries. It plans to expand its product portfolio and increase wallet share with existing clients along with expanding customer base. It further plans to focus on green chemistry by developing new-age technologies, demand for which is expected to grow at 10.5% CAGR globally,” said Motilal Oswal Financial Services in a note.
“The company 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 / EBITDA/ PAT CAGR of 21%/39%/60% over FY19-21 and return ratios in excess of 20%,” said Hemang Kapasi, head of equities, Sanctum Wealth Management.
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