Tarsons Products IPO aggregating to Rs 1,024-crore is comprises of a fresh issue aggregating up to ₹150 crore and offer for sale by certain selling shareholders worth Rs 874 crore. The price band for the issue is Rs 635-662 per share. Tarsons Products is engaged in designing, developing, manufacturing and supplying a diverse range of quality labware products.

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Tarsons Products IPO Details:

IPO Opening Date15-Nov-21
IPO Closing Date17-Nov-21
Issue Size1,023.47 Crores
 OFS – Rs 873.47 Crores
 Fresh issue – Rs 150 Crores
Face ValueRs. 2/- 
IPO Price bandRs.  635- Rs 662 
Lot Size22 Shares
Issue Structure 
QIB50% of  net offer
NIB15% of net offer (  153 Cr)
Retail35%  (- 5,392,000 Shrs, ₹ 357 cr)
Appl. for 1x Retail~ 2.45 Lacs

Updates :

  • ANCHOR ISSUE: Ahead of its IPO, Tarsons Products allotted shares worth Rs 306 crore to 32 anchor investors.
  • Government of Singapore, Abu Dhabi Investment Authority, ICICI Prudential Smallcap Fund , Mirae Asset Healthcare Fund and Aditya Birla MF are some of the funds who applied in the anchor category.

Tarsons Products IPO Review: In Video Presentation form

About Tarsons Products IPO

  • Tarsons Products is engaged in designing, developing, manufacturing and supplying a diverse range of quality lab-ware product, primarily for use in :
    • Labs across research organizations
    • academic institutes
    • pharmaceutical firms
    • diagnostics companies
    • hospitals.
    • Contract Research Organizations (“CROs“)
  • Its manufactures a range of quality lab-ware products that help advance scientific discovery and improve healthcare. Company has five manufacturing facilities located in West Bengal.Sixth green field manufacturing  facility is planned.
  • Company has diversified product portfolio with over 1,700 SKUs across 300 products.
  • Its products are classified into 3 key categories
    • Consumables :includes products such as centrifuge ware, cryogenic ware, liquid handling, PCR consumables etc.
    • Reusable: such as bottles, carboys, beakers, measuring cylinders and tube racks.
    • Others: benchtop instrumentation such as vortex shakers, centrifuges Pipettors etc.

Tarsons Products IPO: Financials

Particulars / (₹ In Cr)Jun 21 (3m)Jun 20 (3m)2021(12)2020(12)2019(12)
Revenue from Operations69.1542.02228.91175.9178.75
Revenue Growth (%)64.56%30.12%-2.53%
EBITDA38.7413.1108.8273.4177.64
EBITDA Margin (%)54.46%30.06%46.45%40.77%42.03%
Net Profit 24.846.9768.8740.5338.96
Equity Share Capital10.190.190.190.20.19
Net worth 268.96182.48244.34197.57135.27
Post IPO Equity10.64
FV2
IPO Price662
EPS  Fy2112.94
PE fy2151.15
Market Cap3523
Market Cap / Sales15.4

Salient Points

Tarsons has over 36 years of experience supplying plastic labware.
It has successfully built ‘Tarsons’ as a leading Indian brand in plastic labware market 
Further about a third of company’s revenues come from exports.
Total income of Rs 234 crore in FY 21
Exports contributed Rs 75 crore
There is no company in India catering to into Polymerase Chain Reaction (PCR) and cell/tissue culture space
Company has already developed first two phases of the PCR products and are working on others.

The company, which has five units in West Bengal. Now it is developing its sixth facility at Panchla, also in WB. The new unit is spread across 21,550 sq mt and is likely to entail total investment of ₹200 crore. As per management, the capacity and area of the Panchla facility would be approximately equal to the combined capacity and area of the other five facilities and thus effectively would double its output.

Cons

  • Company imports over 75% of our raw materials and any delay, interruption, or reduction in the supply of raw materials can affect the operations
  • Foreign Exchange Risks
  • Geographical concentration of manufacturing facilities with West Bengal accounting for 86.32% of its total manufacturing revenue
  • Competition from multinationals
  • Covid related demand many not be sustainable.

Tarsons Products IPO: Assessment

  • Plastic labware market in India was estimated at₹1,225 crore in 2020.
  • Growing at 16 % CAGR to reach ₹2,575 crore by 2025, as per F&S report.
  • Plastic Labware equipment’s share is increasing.
  • Company expects steady growth both in overseas markets as well as within the country.
  • As of FY21, the company reported 30 %growth in revenues. Sales went up to ₹228 crore compared to ₹175 crore in FY20.
  • TPL is among the top-3 plasticware lab equipment companies in India by revenues with  9-12% market share in domestic labware market in Fy20.
  • Major competition for TPL is from MNCs such as Thermofisher, Corning, and Eppendorf which together have 30-40% of Indian market share.
  • Credit Rating: CARE A; Stable (March 22, 2021).
  • The GMP of IPO in grey market was reported around Rs. 180 on 11 Nov 21 •Even as valuations are not cheap, barring any last minute development, I intend to apply in the IPO:
    • considering company’s recognized leadership position in its field.
    • Make in India giving competition to multinationals
    • Plans to double the capacity points to good demand
    • Good Q1 Results and steady performance over the years
    • Major spending in health area on account of COVID.
    • Presence in both domestic and international market.
    • India Pharma gaining traction in CDMO space.
  • Allotment may be rather difficult in this IPO.
  • On flip side company generated ~20% of the top-line from pandemic related sales.
  • So maintaining such return and growth levels in future is a challenging task.
  • Majority of proceeds from IPO are OFS.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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