Tatva Chintan shares off to flying start, share price doubled

Shares of specialty chemical manufacturing company Tatva Chintan Pharma Chem, which made a bumper debut on Thursday, closed the day with a premium of over 113 per cent against the issue price of Rs 1,083.

Mumbai: Shares of specialty chemical manufacturing company Tatva Chintan Pharma Chem, which made a bumper debut on Thursday, closed the day with a premium of over 113 per cent against the issue price of Rs 1,083. Earlier in the day, the stock made its debut at Rs 2,111.80, zooming 94.99 per cent from the issue price on the BSE. It then hit the day's high of Rs 2,486.30, rallying 129.57 per cent.

The stock closed at Rs 2,310.25, a gain of 113.31 per cent. On the NSE, the stock listed at Rs 2,111.85, registering a massive gain of 95 per cent. It closed the trade with a jump of 112.67 per cent at Rs 2,303.30. The company's market valuation was at Rs 5,120.68 crore on the BSE. In traded volume terms, 8.99 lakh shares were traded at the BSE and over 78.60 lakh units at the NSE during the day. The initial public offering (IPO) last week ended with a bumper 180 times subscription. The IPO had opened for subscription on July 16, in a price band of Rs 1,073-1,083 per share. It closed on July 16.

Tatva Chintan’s listing comes in the backdrop of the listing of Zomato on July 23. On its debut, Zomato shares witnessed huge listing gains as the shares of the food delivery platform surged nearly 66 per cent against the issue price of Rs 76. With the rally in the shares, the company's market valuation went past the Rs 1-lakh-crore mark on the BSE during the day. At the close of trade on July 23, the company's market capitalisation was at Rs 98,731.59 crore.

All you need to know about Tatva Chintan IPO

• The IPO of Tatva Chintan Pharma Chem received a massive investor response, getting subscribed a whopping 180.36 times on the last day of the issue on July 16.
• The IPO received bids for 58,83,08,396 shares against 32,61,882 shares on offer, as per data available with the NSE.
• The portion meant for qualified institutional buyers(QIBs) was subscribed 185.23 times, those reserved for non-institutional investors a whopping 512.22 times and retail individual investors(RIIs) quota received 35.35 times subscription.
• Half of the issue has been reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.
• The IPO aggregating up to Rs 500 crore comprised a fresh issue of up to Rs 225 crore and an offer for sale of up to Rs 275 crore. Its price range was at Rs 1,073-1,083 per share.
• The company has decided to allocate 13,85,040 equity shares at Rs 1,083 apiece to anchor investors, aggregating the transaction size to Rs 150 crore, a circular uploaded on the BSE website showed.
• 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 a research and development facility in Vadodara, and general corporate purposes.
• In addition, the company said it expects to receive the benefits of listing of equity shares on the stock exchanges including enhancing visibility and brand image among existing and potential customers and creating a public market for equity shares in India.

About Tatva Chintan Pharma Chem Ltd

• Incorporated in 1996, Tatva Chintan Pharma Chem Ltd (TCPCL) 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).
• The Company is the largest and only commercial manufacturer of SDAs for zeolites in India. It also enjoys the second largest position globally as per F&S Report. In addition, Tatva is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe.
• The Vadodara-based firm exports most of its products to over 25 countries, including the US, China, Germany, Japan, South Africa, and the UK.
• For the fiscal ended March 31, 2021, the company posted a profit of Rs 52.26 crore as compared to Rs 37.78 crore in the preceding financial year. It reported a revenue of Rs 300.35 crore against Rs 263.23 crore.

What are the risks and concerns?

According to Motilal Oswal Financial Services, “Top 10 customers of the company account for 60% of FY21 revenue. Moreover, TCPCL does not enter into any long term contract with them. Thus loss of any customer could impact its business.”

“Besides, high exposure to foreign currency risk as exports form 71% of revenue. Also, TCPCL depends on limited number of suppliers for certain raw materials and does not have any long term contracts,” it said in a note early this month.

( with agency inputs)