Downgrades

In FY23, Tatva Chintan (TATVA) earnings were hurt from a downcycle in its SDA business, which should resume growing FY24 onwards. The addition of a significant new customer to its SDA has the potential to propel growth in the near future. PASC segment will likely reap the benefit of products under qualification and long-term growth on the back of a robust pipeline and cleaner chemistry positioning.

Volume revival surprised in H1FY24 but further upside constrained by higher availability of domestic gas in the near term

Strides Pharma (Strides) is streamlining its CDMO business by merging its soft gel capsule business and injectable business of Steriscience with Stelis. It will also rename Stelis to OneSource after completion, and regrouping will help the promoter better align the focus on all the arms of the CDMO business. The combined entity is likely to have revenue of USD 180-200mn in FY25E and management expects to grow 20-25% p.a. thereon.

Expansion snags due to plant relocation to hamper medium-term growth as utilisation likely breaches 80% in FY25

Expect pickup in retail loans and newer products to aid a 19% credit CAGR over FY23-FY25, with deposit CAGR of 15%

Tarsons Products (Tarsons) offers a range of plastic labware products. Over the years, it has gained ~25% market share (Source: Company) in a segment which was historically dominated by MNCs. Its network consists of over 150 distributors and more than 500 sub-distributors which provide pan-India visibility to its products.

We recommend a BUY rating on the stock with a TP of Rs 97, implying an upside of 10% from CMP.