The initial public offering (IPO) of specialty chemical company Tatva Chintan Pharma Chem has been subscribed 4.51 times on July 16 on day one of bidding. It received bids for 1.47 crore equity shares against the IPO size of 32.61 lakh shares, according to data available on the exchanges.
The portion set aside for retail investors is subscribed 8.24 times, while that for non-institutional investors is subscribed 1.14 times.
The qualified institutional buyers have placed bids for 50 percent of the total shares reserved for them.
Tatva Chintan already raised 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 issue, which will close on July 20, consists of a fresh issue of shares worth Rs 225 crore and an offer for sale of shares worth Rs 275 crore by the promoter and promoter group.
The fresh issue proceeds will be utilised for expansion of the Dahej manufacturing facility, and upgradation of the R&D facility in Vadodara.
Most brokerages recommend 'subscribe' on the back of robust financials, strong growth potential, diversification, potential play on green chemistry, discounted valuation compared to its peers and niche global placement.
Motilal Oswal likes the firm due to its leadership position, wide product portfolio, strong client relationship, and high entry barriers. The company is expected to witness strong growth for the next 2-3 years given its expansion plans.
It is well placed to tap the opportunity in the fast-growing specialty chemical space with an increasing focus on green chemistry by leveraging its strong R&D capabilities, as per the brokerage.
"The issue is valued at 45.9x FY21 P/E on post-issue basis, which appears reasonable compared to peers (avg. P/E of 59x), as it enjoys higher earnings growth. Hence, we recommend 'subscribe'," it said.
First Published: IST