KR Choksey has given Accumulate recommendation for Tatva Chintan Pharma Chem with a target price of Rs. 2902 in its research report issued on Jan 19, 2022

KR Choksey’s research report on Tatva Chintan Pharma Chem

Revenue stood at INR 1,047Mn down by 15.3% QoQ (+30.6% YoY) on account of contraction in demand witnessed for its product segment ‘Structured Directing Agents’ (SDAs) that contributed 51% of revenue as against 62% in the previous quarter. EBITDA stood at INR 238Mn, degrew by -2.9% YoY (-33.7% QoQ) due to increased cost of sales by 40% YoY accompanied by rise in other expenses by 68% YoY. As a result, EBITDA margin declined to 22.75% vs. 30.6% in Q3FY21 (-786 bps YoY). PAT grew by 9.2% YoY at INR 228Mn (-29.6% QoQ). PAT margin reported at 21.8% declined by 427 bps YoY / 443 bps QoQ. EPS stood at INR 10.3 as against INR 10.39 / INR 14.62 in Q3FY21 / Q2FY22, respectively. TCPCL’s 9MFY22 performance posted strong growth in revenue, EBITDA and PAT at 75% / 107% / 152% on YoY basis, respectively. EBITDA and PAT margins stood at 25.5% / 23.4% as compared to 21.5% / 16.2% in 9MFY21, respectively.

Outlook

We assign PE multiple of 40.0x to FY24E EPS to arrive at our revised target price of INR 2,902 per share (old Target: INR 2,620) and reiterate our ACCUMULATE view on the stock.

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