Tatva Chintan Pharma Chem Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Tatva Chintan Pharma Chem Limited (TATVA) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:16:23] Sudarshan Pamana of JM Financial enquired that on the flame retardant side, should TATVA expect some revenues to tickle down by FY23 utilization expectation. Ashok Bothra CFO said that TATVA expects revenue trickling from Dec. and actually picking up from Jan. when new facility starts operating.

• [00:19:14] Sanjesh Jain with ICICI Securities enquired that in SDA, if the real revival would happen only once Chinese heavy duty truck sales start. Chintan Shah MD said it’s the right assumption. It’s when the demand will actually start growing up.

• [00:21:58]  Sudarshan Pamana from JM Financial enquired about the addressable market of new products like pharma intermediate, agrochemical intermediate, and new agrochemical. Chintan Shah MD said that it will take about 1.5 year to get approved and go to a commercial scale. On a 4 year horizon, these products could lead to a revenue of INR800-1,000 crores.

• [00:24:24] Sanjesh Jain of ICICI Securities asked about the potential opportunity in Monoglyme. Chintan Shah MD replied that the company believes it can hit about 2500-3000 tons of volume over next 3-4 years timeframe.

• [00:27:19] Sanjesh Jain of ICICI Securities enquired about PTC side, what should be the steady run rate from FY24 onwards. Chintan Shah MD answered that the company is steadily adding few customers in PTC segment. TATVA has been growing 15-20% rate YoverY and this can be considered as a benchmark and grow at that rate.

• [00:28:30] Gaurav Chopra of Union AMC asked if the SDA sales will be similar to FY20 levels.  Chintan Shah MD said that is what TATVA was expecting. However due to drop in demand from Chinese market has led to revised forecast. However, once the Chinese situation is back to normal the normal demand will happen.

• [00:32:25] Gaurav Chopra with Union AMC asked about the outlook on electrolyte salts that saw sequential drop in revenues. Chintan Shah MD replied that the company may see some drop in next 2-2.5 months because one of TATVA’s large customer is struggling to meet the overall demand from their existing plant.

• [00:37:32] Nirali Gopani of Unique Asset  asked that for the INR400 crore revenue guidance, what kind of margins can be expected. Chintan Shah MD replied that a slightly better margin than 1H23 can be expected which should be in the range of 20-22% of EBITDA.

• [00:40:04] Nirali Gopani of Unique Asset enquired about the growth TATVA expects as a company over the next 2-3 years. Chintan Shah MD said it’s a long way away, but added that the products that have been successfully developed and are about to be developed in a very short span of time, all have a large potential downside application area.

• [00:42:17] Krishan Parwani with JM Financial asked if the company is on track on newer capacities coming this month. Chintan Shah MD clarified that TATVA expects to start water trials between 7 Dec. to 15 Dec. 2022 and is on track with these capacities.

• [00:49:17] Rohit enquired if TATVA is thinking of working on metal acetylacetonates or glycidylether and also about customers in electrolyte sales pipeline. Chintan Shah MD clarified that the company is not thinking of it as of now. In electrolyte, TATVA is commercially working with 2. And a third has placed their trial order and fourth is in queue.

• [00:53:11] Rohit asked about Monoglyme and related products, by when does TATVA expects these to be commercially sold. Chintan Shah MD replied that in the 9-12 month timeframe the company should start commercialization.