- TCPCL is a niche global player in specialty chemicals with SDAs in centre stage.
- It has posted growth in its top and bottom lines for the past three years.
- The issue is priced reasonably compared to listed peers.
- Globally renowned client list with long term relations.
ABOUT COMPANY:
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 supercapacitor 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. (Source: F&S Report)
In addition, TCPCL is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe. (Source: F&S Report) As a manufacturer of specialty chemicals, it focuses on the application of its products which form a key ingredient to customers’ manufacturing and industrial processes. For instance, SDA and PTC products have various applications in green chemistry, which is pertinent considering the growing focus on green and sustainable technologies.
The company continuously strives to improve processes and infrastructure to help reduce its impact on the environment and has accordingly, undertaken various ‘green’ chemistry processes such as electrolysis. Considering the wide application of its products, it serves customers across various industries, including the automotive, petroleum, pharmaceutical, agrochemicals, paints and coatings, dyes and pigments, personal care and flavour and fragrances industries.
Apart from its customers in India, the company also exports products to over 25 countries, including the USA, China, Germany, Japan, South Africa, and the UK. During the Fiscals ended March 31, 2019, 2020, and 2021, exports of products amounted to Rs. 143.52 cr., Rs. 202.02 cr. and Rs. 211.99 cr. which accounted for 69.57%, 76.74%, and 70.58%, of its revenue from operations, respectively. As of March 31, 2021, its portfolio had 154 products in four categories i.e. SDAs, PTCs, Electrolyte Salts and Pharma/Agri intermediates.
TCPCL’s customers include Merck, Bayer AG, Asian Paints Ltd., Ipox Chemicals KFT, Laurus Labs Ltd., Tosoh Asia Pte. Ltd., SRF Limited, Navin Fluorine International Limited, Oriental Aromatics Ltd., Atul Limited, Otsuka Chemical (I) Pvt Ltd., Meghmani Organics Limited, Divi’s Laboratories Limited, Hawks Chemical Company Limited, Firmenich Aromatics Prod. (I) Pvt. Ltd., Jiangsu Guotai Super Power New Materials Co., Ltd. and Jade Chem Co. Ltd.
ISSUE DETAILS / CAPITAL HISTORY:
To part finance its need for funding capital expenditure for expansion of its Dahej facility (Rs. 147.10 cr.), up-gradation of its R & D facility (Rs. 23.97 cr.) and general corpus funds, TCPCL is coming out with a maiden IPO of Rs. 500 cr. comprising of fresh equity issue worth Rs. 225 cr. (2077556 shares) and an offer for sale (OFS) of Rs. 275 cr. (2539244 shares). The company will be issuing approx. 4616800 shares of Rs. 10 each on the basis of the upper price band. TCPCL has fixed a price band of Rs. 1073 – Rs. 1083 per share having a face value of Rs. 10. The issue opens for subscription on July 16, 2021, and will close on July 20, 2021. Minimum application is to be made for 13 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 20.83 % of the post issue paid-up capital of TCPCL. The company has allocated an IPO quota of 50% for QIBs, 15% for HNIs and 35% for retail investors.
Book Running Lead Managers (BRLMs) to this issue are ICICI Securities Ltd. and JM Financial Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue.
TCPCL’s entire equity is issued at par so far. It has also issued bonus shares in the ratio of 1 for 2 in March 2001, 1 for 1 in March 2006, 12 for 10 in March 2009 and 1.5 for 1 in March 2021.
The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.91, Rs. 1.11, Rs. 1.59, Rs. 1.65, Rs. 2.49, Rs. 2.69, Rs. 2.87, Rs. 3.06 and Rs. 4.00 per share. Post-IPO, TCPCL’s current paid-up equity capital of Rs. 20.09 cr. will stand enhanced to Rs. 22.17 cr. Based on the upper price band, the company is looking for a market cap of Rs. 2400.48 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, TCPCL has reported turnover/net profits of Rs. 206.80 cr. / Rs. 20.54 cr. (FY19), Rs. 264.62 cr. / Rs. 37.79 cr. (FY20) and Rs. 306.29 cr. / Rs. 52.26 cr. (FY21). Thus it has posted growth in top and bottom lines for the past three fiscals. It has posted a CAGR of 21.70% in top lines and a CAGR of 59.50% in bottom lines. Its debt-equity ratio stood at 0.54 as of March 31, 2021.
For the last three fiscals, TCPCL has posted an average EPS of Rs. 20.99 and an average RoNW of 30.75%. The issue is priced at a P/BV of 13.11 based on its NAV of Rs. 82.62 as of March 31, 2021, and at a P/BV of 6.14 based on its post-IPO NAV of Rs. 176.39 (based on the cap price).
If we attribute FY21 earnings on fully diluted post issue equity, then the asking price is at a P/E of around 45.95 and thus the issue is reasonably priced as the industry composite is around 56 as per RHP data.
COMPARISON WITH LISTED PEERS:
As per the offer documents, TCPCL has shown Aarti Ind., Navin Fluorine, Alkyl Amines, Vinati Organics and Fine Organics as its listed peers. They are currently trading at a P/E of 60.43, 75.53, 65.61, 73.36 and 80.79 respectively (as of July 13, 2021). However, they are not truly comparable on an apple to apple basis.
DIVIDEND POLICY:
In the last three fiscals, TCPCL has paid a dividend of 50% (on pre-bonus equity) for FY21 only. It will adopt a prudent dividend policy post listing based on its financial performance and future prospects.
MERCHANT BANKER’S TRACK RECORDS:
The two BRLMs associated with the offer have handled 33 public issues in the past three years, out of which 11 issues closed below the issue price on the listing date.
CONCLUSION / INVESTMENT STRATEGY
The company is in a fast forward mode and the issue is reasonably priced. The green chemical industry is fancied by investors across the board. Investment may be considered for short to long term rewards.
The original review was written by Dilip Davda, appears on chittorgarh.com and is available here.
Indian Equities declined in-line with Asian peers on Friday as rapidly spreading Delta variant of Covid-19 in the region fanned fears of a stalled growth. That apart, Washington’s call to add at least 10 Chinese entities to its economic blacklist over alleged human rights abuses and high-tech surveillance in Xinjiang pulled benchmarks in Japan, South Korea, and China down by up to 1 per cent.
Back home, the S&P BSE Sensex dropped 183 points, or 0.35 per cent, to settle at 52,386 levels while NSE’s 50-share benchmark declined 38 points, or 0.24 per cent, to close at 15,690 levels. Heavyweights, TCS, HDFC Bank, Reliance Industries, Axis Bank, Kotak Bank, and HDFC were the top laggards along with Wipro, Bajaj Auto, and M&M.
The broader markets, on the flipside, settled about half a per cent higher. Sectorally, the Nifty Private Bank index was the biggest drag, down 0.6 per cent. On the upside, the Nifty Realty index zoomed 2.4 per cent.
Continue Reading →
Verdict: GR = Good fundamentals + Reasonable valuation
Rs 963 cr IPO: entirely OFS (no fresh issue) by PE investor (83% of OFS) and promoter (13%)
IPO Date: Wed 7th Jul to Fri 9th Jul 2021
Price band: Rs. 828-837 per share
MCap (at upper band): Rs. 8,093 cr, 12% dilution
Listing Date: 19th July 2021
Continue Reading →
- CSTL is a global player with niche techno developed products.
- Last three fiscals it has posted remarkable performance.
- This is a dividend-paying company since FY12.
- Based on financial parameters, the issue is fully priced.
- Investment may be considered with a long term perspective.
ABOUT COMPANY:
Clean Science & Technology Ltd. (CSTL) is among the few companies globally-focused entirely on developing newer technologies using in-house catalytic processes, which are eco-friendly and cost-competitive (Source: F&S Reports). This has enabled it to emerge as the largest manufacturer globally of certain speciality chemicals in terms of installed manufacturing capacities as of March 31, 2021 (Source: F&S Reports). Some of these technologies have been developed and commercialized for the first time globally (Source: F&S Reports). The company continued to focus on product identification, process innovation, catalyst development, the significant scale of operations as well as measures towards strategic backward integration have all contributed to its success as one of the fastest-growing and among the most profitable speciality chemical companies globally (Source: F&S Reports).
CSTL manufactures functionally critical speciality chemicals such as Performance Chemicals (i.e. MEHQ, BHA and AP), Pharmaceutical Intermediates (i.e. Guaiacol and DCC), and FMCG Chemicals (i.e. 4-MAP and Anisole). Within 17 years of incorporation, it has grown to be the largest manufacturer globally of MEHQ, BHA, Anisole and 4-MAP, in terms of installed manufacturing capacities as of March 31, 2021 (Source: F&S Reports).
CSTL’s speciality chemicals have a wide range of applications that cater to a diverse base of customers across the industries globally.
Continue Reading →
Equity markets snapped their four-day losing run and ended near day’s high on Friday as gains in pharma and banking counters, and select heavyweights lent support to the indices. Breaking away from a lackluster trade, the frontline indices picked pace in the second half of the session as ICICI Bank, Reliance Industries, SBI, and HDFC gained between 0.7 per cent and 1.6 per cent.
The S&P BSE Sensex closed with gains of 166 points, or 0.32 per cent, at 52,485 levels while the NSE’s Nifty50 settled at 15,722 levels, up 42 points or 0.27 per cent.
However, trading action was skewed towards small-cap stocks as hefty buying in Mangalam Cement, Omaxe, OnMobile Global, Route Mobile, and Indoco Remedies, pushed the BSE SmallCap index up 1 per cent. Gains in mid-cap index remained capped amid sell-off in Adani Transmission, Adani Enterprises, Adani Green Energy, JSW Energy, SAIL, and Vodafone Idea. The BSE MidCap index ended little changed.
Sectorally, the Nifty Pharma index was the top gainer, up 0.6 per cent, followed by the Nifty Bank index, up 0.4 per cent. Conversely, the Nifty Metal index was the top sectoral loser on the NSE, down 1.5 per cent.
Continue Reading →
Markets started the July F&O series with impressive gains on Friday as hefty buying in metals, financials, and pharma sectors lifted indices for the second day. The Nifty PSU Bank index closed 2.7 per cent higher on the National Stock Exchange (NSE) amid renewed privatisation buzz and fund-raising by banks.
That apart, the Nifty Metal index zoomed 2.5 per cent after Russian government said it is preparing new export taxes from August 1 for steel products, nickel, aluminium and copper which will cost their producers $2.3 billion.
The Nifty Bank, Private Bank, Pharma, and auto indices, meanwhile, rose between 0.7 per cent and 1.6 per cent.
Overall, the frontline S&P BSE Sensex index added 226 points, or 0.43 per cent, to settle the session at 52,925 levels while the Nifty50 index shut shop at 15,863-mark, up 73 points or 0.46 per cent.
In the broader market, the BSE MidCap and SmallCap indices advanced 1 per cent and 0.4 per cent, respectively.
Tata Steel (up nearly 4 per cent), Axis Bank, State Bank of India, ICICI Bank, Hindalco, JSW Steel, Maruti Suzuki, and Coal India made it to the list of outperforming stocks in the large-cap segment while Vodafone Idea, Apollo Hospitals, SAIL, Ashok Leyland, Allcargo Logistics, Uttam Sugar Mills, and Ajmera Realty marched aheead in the broader market space.
Continue Reading →
Benchmark equity indices slumped over 1 per cent in Friday’s intra-day session but made a sharp V-shaped recovery to end the day with little change. Financials and metals exerted pressure on the bourses, even as gains in Reliance Industries, FMCG and select private bank stocks tried to limit the losses.
The S&P BSE Sensex fell 722 points intra-day but recovered to close 21 points, or 0.04 per cent, higher at 52,344 levels. The broader Nifty50 index, meanwhile, bounced back from the day’s low of 15,451 to end at 15,683 levels, down 8 points or 0.05 per cent.
The correction was deeper in the broader markets where the BSE MidCap and SmallCap indices closed 0.70 per cent and 0.89 per cent down, respectively.
Overall, the market breadth was heavily skewed towards bears with the Advance to Decline ratio standing at 1:2. ONGC, Coal India, Power Grid, JSW Steel, UPL, NTPC, M&M, SBI, and Nestle India were the top laggards among the large-cap stocks while Mahanagar Gas, Ashok Leyland, SAIL, Canara Bank, Max Financial Services, Graphite India, HEG, Hindustan Copper, Affle India, and Wockhardt Pharma cracked in the mid and small-cap segments.
Sectorally, the Nifty PSU Bank declined nearly 2 per cent while the Nifty Auto, Metal, and Realty indices slipped up to 1 per cent each. On the upside, the Nifty FMCG index ended 0.29 per cent higher.
Continue Reading →
- SMEL is one of the leading integrated metal producing and profit-making company.
- It has a well-diversified product portfolio in metal with the captive power plant.
- It suffered a setback for FY20 on account of expansion underway and higher provision.
- The issue is fully priced based on its financial data.
- Investors may consider an investment with a long-term perspective.
ABOUT COMPANY:
Shyam Metalics And Energy Ltd. (SMEL) is a leading integrated metal producing company based in India (Source: CRISIL Report) with a focus on long steel products and ferroalloys. It is amongst the largest producers of ferroalloys in terms of installed capacity in India, as of February 2021 (Source: CRISIL Report). The company has the ability to sell intermediate and final products across the steel value chain. As of March 31, 2020, SMEL was one of the leading players in terms of pellet capacity and the fourth-largest player in the sponge iron industry in terms of sponge iron capacity in India (Source: CRISIL Report).
The company primarily produces intermediate and long steel products, such as iron pellets, sponge iron, steel billets, TMT, structural products, wire rods, and ferroalloys products with a specific focus on high margin products, such as customised billets and specialised ferroalloys for special steel applications. Its TMT and structural products are sold under the brand ‘SEL’ and logo.
It also undertakes conversion of hot rolled coils to pipes, chrome ore to ferrochrome and manganese ore to silico manganese for an Indian steel conglomerate. The company is also currently in the process of further diversifying its product portfolio by entering into the segments, such as pig iron, ductile iron pipes and aluminium foil.
Continue Reading →
Gurugram based Sona BLW Precision Forgings – one of India’s leading mission-critical automotive systems and components manufacturers – is planning to launch its maiden public offer later this month. The company filed its draft red herring prospectus (DRHP) with SEBI in February 2021 and received approval in May 2021. Here are few key points you need to know about the company and its business.
#1 Fresh + OFS
Sona BLW Precision Forgings IPO will involve mobilization of INR6,000 crores. The IPO will consist of a fresh issue of equity shares worth INR300 crore and an offer for sale (OFS) amounting to INR5,700 crores by existing shareholders.The capital raised through fresh issues is proposed to be used for repayment/pre-payment of INR225 crores borrowings availed by the company and general corporate purposes.
#2 Capital Structure
Singapore VII Topco III is the major shareholder in the company with a 66.28% equity stake. Singapore VII Topco III is an affiliate of global private equity major Blackstone Group. The remaining stake is held by Sona Autocomp Holding Private Limited. Sona Autocomp is controlled by Sunjay Kapur who has vast experience in the automotive industry and also serves as the chairman of Sona BLW Precision Forgings.
Market bulls rode the global momentum on Dalal Street on Friday, hitting new lifetime highs on the way. Bond yields in the US and Euro zone fell, with German 10-year yields set for their biggest fall this year, as investors bet on ultra-lose monetary policy to stay in place.
Backed by firm global cues, the frontline S&P BSE Sensex hit an all-time-high of 52,641.5 while the broader Nifty50 index claimed 15,835.5-mark in morning deals. In the broader markets, the BSE MidCap and SmallCap indices, too, touched new peaks of 23,045 and 25,249 levels, respectively.
That said, a fag-end weakness in banking, realty, and FMCG counters dragged the markets off highs. By close, the BSE barometer was at 52,475 levels, up 174 points or 0.33 per cent while the 50-share Nifty index ended at 15,799 levels, up 62 points or 0.39 per cent.
The BSE MidCap index, on the other hand, closed 0.14 per cent up while the BSE SmallCap index ended 0.4 per cent higher.
Sectorally, the Nifty Metal index zoomed nearly 3 per cent on the NSE, followed by the Nifty IT and Pharma indices, up over 1 per cent higher each. On the downside, the Nifty Realty and PSU Bank indices slipped up to 1 per cent.
Continue Reading →
