KR Choksey's research report on Tatva Chintan Pharma Chem
Tatva Chintan Pharma Chem’s revenue missed our estimates (-32.7%) due to a steep decline in price realization. EBITDA missed our estimate (-58.1%) due to better-than-expected operating expenses. We believe short-term pain will persist as the industry is operating at minimum inventory levels which results in lower price realization. However, the demand in Agro-chemical sector will pick up in couple of quarters, and the approval for three agro-intermediates is expected in the near term. Currently, the stock is trading at PE multiples of 49.8x/27.4x, based on FY25E/FY26E EPS, respectively.
Outlook
We assign a P/E multiple of 28.0x (previously: 33.5x) on FY26E EPS of INR 36.5 (maintained) to arrive at a target price of INR 1,021/share (previously: INR 1,223/ share) due to continued short term challenges but demand recovery is expected in the medium-term.
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