Buy Tatva Chintan Pharma Chem; target of Rs 2000: ICICI Securities

ICICI Securities is bullish on Tatva Chintan Pharma Chem recommended buy rating on the stock with a target price of Rs 2000 in its research report dated September 27, 2023.

Broker Research

September 28, 2023 / 16:03 IST

Buy

live

bselive
nselive

Volume

Todays L/H

ICICI Securities research report on Tatva Chintan Pharma Chem

In FY23, Tatva Chintan (TATVA) earnings were hurt from a downcycle in its SDA business, which should resume growing FY24 onwards. The addition of a significant new customer to its SDA has the potential to propel growth in the near future. PASC segment will likely reap the benefit of products under qualification and long-term growth on the back of a robust pipeline and cleaner chemistry positioning. Electrolyte salt business anticipates inflection from CY25, as its customers win commercial projects, alongside TATVA establishing itself as a supplier for energy storage solutions in super-capacitor, zinc and sodium batteries. Flame retardant customers have indicated start of purchase soon, finding strength in bromine prices recovering, and China’s TBBA inventory normalising. We incorporate TATVA’s fund raise, and equity dilution into our estimates and cut our FY24E EBITDA by 7.5%, but increase FY25E by 3.3%.

Outlook

Our EPS cuts of 22%/5% for FY24E/FY25E entail the equity dilution hit. Consequently, our revised target price stands at INR 2,000 (earlier INR 2,110) with an unchanged 30x FY25E PE multiple. Maintain BUY.

For all recommendations report, click here