ADVERTISEMENT

Tatva Chintan Pharma Chem - Core Business Normalising; New Products Pipeline Maturing: ICICI Securities

Structure directing agent revenues to recover; likely impetus from customer addition.

<div class="paragraphs"><p>Scientist testing a chemical solutions in test tubes in R&amp;D lab. (Source: freepik)</p></div>
Scientist testing a chemical solutions in test tubes in R&D lab. (Source: freepik)

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

In FY23, Tatva Chintan Pharma Chem Ltd.'s earnings were hurt from a downcycle in its structure directing agent business, which should resume growing FY24 onwards. The addition of a significant new customer to its SDA has the potential to propel growth in the near future.

Pharmaceutical and Agrochemical Intermediates and Other Specialty Chemicals segment will likely reap the benefit of products under qualification and long-term growth on the back of a robust pipeline and cleaner chemistry positioning.

Electrolyte salt business anticipates inflection from CY25, as its customers win commercial projects, alongside Tatva Chintan establishing itself as a supplier for energy storage solutions in super-capacitor, zinc and sodium batteries.

Flame retardant customers have indicated start of purchase soon, finding strength in bromine prices recovering, and China’s TBBA inventory normalising.

We incorporate Tatva Chintan’s fund raise, and equity dilution into our estimates and cut our FY24E Ebitda by 7.5%, but increase FY25E by 3.3%.

Our earnings per share cuts of 22%/5% for FY24E/FY25E entail the equity dilution hit. Consequently, our revised target price stands at Rs 2,000 (earlier Rs 2,110) with an unchanged 30 times FY25E price-to-earning multiple. Maintain 'Buy'.

Risks:

  • Failure to qualify for large PASC products, and add new customer in SDA.

  • Lower-than-expected margins.

Click on the attachment to read the full report:

ICICI Securities Tatva Company Update.pdf
Opinion
Pharma Key Molecule Check - Traction In Key Dr. Reddy's, Lupin, Ajanta Pharma Products: Yes Securities

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.