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Tatva Chintan Stock Surges 130% on Listing Day, Doubles Investors’ Money. Hold or Sell?

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Tatva Chintan Pharma Chem Limited stock made a stellar debut on market on Thursday, opening for trade on July 29 at nearly 100 percent premium over its listing price. The stock debuted on at Rs 2,111.85 on the National Stock Exchange (NSE), a 95 per cent premium to its issue price of ₹1,083 a piece. On the Bombay Stock Exchange (BSE), the stock listed at Rs 2,111.80, up over 95 per cent. The much-awaited stock climbed 130 per cent to Rs 2,486, minutes after listing.

After doubling investors’ wealth, the stock was trading at Rs 2,281.9 at 0100 IST on July 29, more tan 110% up over its issue price. With over 100 per cent listing gains, Tatva Chintan Pharma Chem stock was the second one to double investors’ money in the month of July.

“We had ‘Subscribe’ rating on the IPO given its healthy margin profile, strong focus on R&D, promising sector outlook and longstanding relationship with key customers. The price was valued at premium valuation of 46x P/E on FY21 basis, which did provided leeway for gains being still at discount to industry peers and positive outlook. On a long-term basis it is a good business to own but at this overwhelming listing, the CMP is at stretched with P/E of 98x, short to medium term investors can consider to booking profits or add during correction,” said Vinod Nair, head of research at Geojit Financial Services.

“Tatva Chintan Pharma Chem, one of the leading specialty chemicals manufacturer globally, had a stellar debut on the exchanges today with  95% premium at Rs 2,112/Share against its issue price of Rs 1,083/share. It further rallied towards its intraday high of Rs 2,486, gaining 130%. The company saw very strong subscription of 180x with retail portion getting subscribed 35x, QIB segment 185x while the non-institutional investors segment attracted 512x. After Clean Science, TCPCL is the second company in the green chemical space to get list on the bourses. For some of its products it is the only manufacturer in India and among the largest globally. Its products have various applications in green chemistry, which is gaining prominence considering the growing focus on clean and sustainable technologies. Over FY18-21, Tatva Chintan’s Revenue/ PAT grew at 30%/62% CAGR, supported by margin expansion of almost 500 bps to 21.9%,” said Sneha Poddar, research analyst, broking & distribution, Motilal Oswal Financial Services.

“Tatva Chintan is expected to do well due to its leadership position, wide product portfolio, strong client relationship and capacity expansion leading to strong growth ahead,” Poddar added.

“Specialty chemical company received massive response from subscribed and touched the daily circuit limit of Rs 2534.2 on NSE exchange. The company is leading manufacturer of structure directing agents and phase transfer catalyst with diversified product portfolio, strong financial performance and global market presence with customer base across industries,” said Sandeep Matta, founder, TradeIT Investment Advisor.

“With strong fundamentals, we recommend investors to hold Tatva Chintan as long-term portfolio stock and further accumulate the counter on dips for the target of over Rs 3,500 in medium terms,” Matta mentioned.

“Tatva chintan is a manufacturing of green chemicals such as structure directing agents (SDA), phase transfer catalyst (PTC), electrolyte salts for super capacitor batteries, pharmaceutical & agrochemical intermediates, and other specialty chemicals. For the products SDA, PTC and electrolyte salts, TCPCL is the largest producer in India, while it ranks 2nd globally for Zeolite. SDA and PTC products have various applications in ‘Green Chemistry’, which is relevant considering the growing focus of developed and developing countries on green and sustainable technologies to reduce emission and industrial discharge. The company can deliver an EPS of Rs 32 and 36 by FY23e and FY24e,” said Ashish Chaturmohta, director research, Sanctum Wealth Management.

“The company has listed at 100% Premium to offer price. At the time of IPO the valuation was 30x FY24. However, based on its Stellar listing it’s nor trading at 65x. Long term investors should stay invested as there is plenty moat however wouldn’t advice to make any new investment as it’s now more expensive that Peers as well,” he further said.

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