Tatva Pharma IPO-Fundamental Analysis

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Last updated on July 16th, 2021 at 11:55 am

Tatva Pharma IPO-Fundamental Analysis

Key Financial Highlights of Tatva Pharma

  • Financial performance- Tatva Pharma has strong operating and net margins.  The topline and the bottomline of the Issuer show an increasing trend and consistent growth.
  • Total revenue for FY21 increased 15.75% to Rs 306.29 crore as against Rs 264.62 crore in FY20. The increase in total revenues in FY20 was 28% when compared to FY19.
  • PAT showed an increase by 38% to Rs 52.26 crore for FY21, being Rs 37.79 crore for FY19. Profitability margins are plotted in the chart.
  • Return on net worth was 31.49%, 32.11%, and 25.77 for FY21, FY20, and FY19 respectively.
  • The debt to equity ratio is low, being 0.54 as of 31st March 2021.
  • Return on capital employed is 27%, 33%, and 34% for FY19, FY20, and FY21 respectively.

Tatva Pharma IPO-Offer Details

Profitability Margins chart

 

Valuation of Tatva Pharma IPO

The Issue is valued at 41.62 times its earnings at the higher price band of Rs 1083 per share and with EPS of 26.02 as on 31st March 21. Peer average P/E is 56.05x; hence the Issue is reasonably valued.

At NAV of Rs 82.62 per share as on 31st March 21, P/BV is 13.11x

Valuation parameters

Valuation Parameters EPS P/E NAV P/BV
26.02 41.62x 82.62 13.11x

Peer Comparison

Peers Total Income (FY21 in INR crore) EPS P/E RoNW
Aarti Ind 4506.80 30.04 29.07 15.23%
Navin Fluorine 1258.40 52.03 73.12 15.76%
Alkyles Amine 1249.40 144.68 25.62 37.27%
Vinati Organics 980.10 26.20 77.41 17.45%
Fine organics 294.40 39.25 75.01 16.45%
Tatva Pharma 306.30 26.02 41.62 31.49%

Investment Strategy/Summary

Tatva Pharma is a specialty chemical company and the companies in this sector have a niche product portfolio with high product customization which creates high entry barriers for the competitors in the form of vendor acquisition, lengthy and complex product approval, registration process, customer loyalty among others. Further, a distinguished and resilient business model is also a unique driver for the companies in this sector.

Tatva Pharma is the largest and only commercial manufacturer of SDAs for zeolites in India. The Issuer is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe. SDA and PTC products have various applications in green chemistry, which is pertinent considering the growing focus on green and sustainable technologies. The rising demand and adoption of green chemistry in organic synthesis is expected to drive the growth of PTCs market across the globe. Hence looking at bright business prospects and strong financial profile; one might subscribe to the IPO.

RHP of Tatva Pharma IPO

 

 

Disclaimer: The above content is for general information purpose only and does not constitute professional advice. The author/ website will not be liable for any false, inaccurate, incomplete information. Any reliance you place on above content is therefore strictly at your risk.

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About CA Priyanka Choudhary Jain 122 Articles
Chartered Accountant & an experienced credit analyst. She has worked with CRISIL as a Senior Credit Analyst on rating assignments including business & financial analysis in Corporates as well as the Public Finance Sector. Please mail your queries, feedback, and any suggestions to her on info.financepost@gmail.com

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