Tatva Chintan Pharma Chem Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from Tatva Chintan Pharma Chem Limited (TATVA) Q1 FY23 Earnings Concall

Management Update:

• In the SDA segment, TATVA said it is seeing a renewed interest for demand of SDAs and expect full scale demand revival beginning from 4Q23.

Q&A Highlights:

• Nirali Gopani from Unique Asset asked about drop in SDA numbers even though chip shortage has eased. Chintan Shah MD replied that the drop in SDA numbers is due to inventory levels dragging to a longer period because of drop in sales, which also led to stoppage of inventory purchase. This cyclical movement caused this shortage.

• Isha Agarwal of VT Capital enquired how the company tackled the high power cost in Europe and plans to hedge the power cost going forward. Chintan Shah MD clarified that the Europe subsidiary is only distribution arm, there is no production activity happening in TATVA’s US or Europe region. There is no impact of power cost in Europe that’s impacting TATVA in any way.

• Isha Agarwal of VT Capital also asked since TATVA is export oriented, if it saw any impact of Europe or US marketing impact the order book. Chintan Shah MD answered that TATVA is seeing better demands coming in from US and also slightly better demands from Europe.

• Sanjesh Jain from ICICI Securities asked about the demand for the coming quarter. Chintan Shah MD replied that the company will definitely see a decent improvement from 1Q23 in 2Q23. A large customer in China is still expected to begin by Dec. So once that kicks in TATVA will be back to full scale demand structure.

• Sanjesh Jain from ICICI Securities enquired about the status of another large customer order. Chintan Shah MD clarified that TATVA has been approved formally now. And now have to go for a full scale plan trial happening in Dec. 2022.

• Sanjesh Jain from ICICI Securities asked about the electronic chemical market going forward. Chintan Shah MD replied that the company expects this segment to have a very robust future in the coming years.

• Nikhil Rungta of Nippon India asked about the expected growth for non-SDA products in FY23. Chintan Shah MD replied that the company might see slightly better performance going forward in 2Q, 3Q and 4Q because one of the products on PASC has gone to commercialization in 1Q23.

• Krishan Parwani from JM Financial asked about the status and timeline of the new capacities. Chintan Shah MD replied that the company is very much on schedule. TATVA is almost sure that it will complete the project by end of November.

• Krishan Parwani from JM Financial asked about capex expectation for FY23 and FY24. Chintan Shah MD replied that the company may not see any major capex happening in FY24 as TATVA has already procured one additional land for the next phase of expansion. After FY24, TATVA expects some capex to be done.

• Ritik Shrawak with Edelweiss enquired about the market size of flame retardant in India and globally. Chintan Shah MD said that global market size is close to around 160,000 metric tons. And the plant TATVA is intending to setup is with a capacity of 5,000 metric tons right now.