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Tatva Chintan Pharma Chem Ltd.’s revenue in Q4 FY22 decreased 9.3% year-on-year and was 11% below our estimates of a higher decline in revenue from Structural Directorates.
However, the gross margin increase of 280 basis points QoQ was a positive surprise despite poorer revenue mix. It only expects revival of SDA in the 2nd half of 23, and has guided for a flat earnings for 23 years.
However, we expect an upward risk if car production is normalized and the benefits of accumulated demand and large inventories are liquidated.
Despite lower SDA sales, Tatva Chintan expects good growth in FY23 contribution from other segments and start of flame retardant production.
We are excited about its new product pipeline, which is niche, has high demands on purity and is therefore challenging.
The company expects that the new facility (to be commissioned in December 2022) will be utilized faster than previous estimates, that capex will continue and drive growth.
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