Tatva Chintan Pharma Chem's initial public offering saw strong demand, as the IPO was fully subscribed in the initial hour of bidding on the first day itself. Another big-bang opening for an IPO this week as Zomato's public offer, too, draws an enthusiastic response.
The offer was subscribed 4.50 times on July 16, as investors put in bids for 1.46 crore equity shares against the IPO size of 32.61 lakh equity shares, data available on the exchanges showed.
The demand from retail investors remained strong for the specialty chemical company, as their reserved portion was subscribed 8.23 times.
The portion set aside for non-institutional investors was subscribed 1.13 times, while qualified institutional buyers' portion was subscribed 50 percent.
Tatva Chintan mobilised Rs 150 crore of the total issue size of Rs 500 crore through the anchor book on July 15 at the higher end of the price band of Rs 1,073-Rs 1,083 per equity share.
The IPO comprises a fresh issue of Rs 225 crore and an offer for sale of Rs 275 crore by promoter and promoter group whose shareholding will be reduced to 79.2 percent after the issue.
The fresh issue proceeds will be utilised for the expansion of Dahej manufacturing facility and the upgrade of the R&D facility in Vadodara.
Also read: Tatva Chintan Pharma Chem IPO opens, 10 key things to know about the issue
Tatva Chintan Pharma Chem is a specialty chemicals company manufacturing a diverse portfolio of structure directing agent, phase transfer catalyst, electrolyte salts for super capacitor batteries and pharmaceutical and agrochemical intermediates and other specialty chemicals.
Tatva recorded revenue growth of 21.7 percent CAGR in FY19-21, supported by higher volume growth across the segments.
Also read: Tatva Chintan Pharma Chem IPO opens today: Should you subscribe?
"And the company was able to improve its margin along with better working capital management and operating leverage is likely to play out, it can aid free cash flow (FCF) considerably over the years,” said Anand Rathi. The brokerage is positive on the long-term prospects of the company and recommended a subscribe rating to the IPO.
"The company is available at the upper end of the IPO price band at 45.9x its FY21 earnings, with a market cap of Rs 2,400.5 crore. Further on FY21 earnings basis the company is trading below the industry average of 56.05x. Looking at the P/B ratio on the upper price band, book value and P/B are Rs 82.6 and 13.11 multiple respectively," it said.
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