Tatva Chintan Pharma Share Price Target: The company has encountered a slight downturn in revenue, which missed our initial estimates due to a general decline across all business segments. Specifically, revenue for Q4FY24 plummeted by 21.1% year-over-year to INR 983 million.
This downturn has been notably sharp in the Structure Directing Agents (SDA) and Phase Transfer Catalysts (PTC) sectors, which saw declines of 26.5% and 26.3%, respectively.
Tatva Chintan Pharma Share Price
Despite these challenges, Tatva Chintan managed to exceed expectations in terms of EBITDA, primarily due to reduced employee expenses and a lower cost of goods sold. The EBITDA for Q4FY24, in fact, showed a significant quarterly increase of 42.0%, reaching INR 156 million. This outperformance has allowed the company to expand its EBITDA margin by 281 basis points year-over-year to 15.9%.
Looking ahead, the management remains cautiously optimistic, projecting a robust revenue growth of 35.0% to 40.0% for FY25E. This outlook is supported by stable raw material costs and expected increases in business volumes, which could drive further margin expansion.
However, external challenges persist. Freight costs, particularly for the European market, have remained elevated, adversely affecting the transit times. This logistical hurdle is expected to delay the validation and commercialization of several key products in the Pharmaceutical and Agrochemical intermediates (PASC) segment.
Given these complications and the current uncertainty in price realization, we have adjusted our target price for Tatva Chintan Pharma Chem’s shares to INR 1,223, down from INR 1,487, and revised our stock rating to ‘HOLD’ from ‘ACCUMULATE’.
The company’s stock is currently trading at PE multiples of 47.4x/32.7x based on FY25E/FY26E EPS estimates. With the management’s guidance and the ongoing strategic adjustments, investors are advised to monitor the evolving market conditions closely as Tatva Chintan navigates through these turbulent times.
Tatva Chintan Pharma Share Price Target
| Date | 9th May 2024 |
|---|---|
| Company | Tatva Chintan Pharma Chem Ltd |
| CMP (Rs) | Rs. 1,193 |
| Target Price | Rs. 1,223 |
| Potential Upside | 2.5% |
| Recommendation | HOLD |
| Market cap (Cr) | Rs. 27,837 cr |
| Author | KRChoksey |
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