Tarsons Products Limited is an Indian labware company engaged in the designing, development, manufacturing and marketing of ‘consumables’, ‘reusables’ and ‘others’ including benchtop equipment, used in various laboratories across research organizations, academia institutes, pharmaceutical companies, Contract Research Organizations (“CROs”), Diagnostic companies and hospitals. The ‘Consumables’ category includes products such as centrifuge ware, cryogenic ware, liquid handling, PCR consumables and petri dish, transfer pipettes and others. ‘Reusables’ category includes products such as bottles, carboys, beakers, measuring cylinders and tube racks. ‘Others’ category includes benchtop instrumentation such as vortex shakers, centrifuges pipettors and others.
As of June 30, 2021 we had a diversified product portfolio with over 1,700 SKUs across 300 products. Currently, the company has 5 manufacturing facilities located in West Bengal. The company also has a strong distribution network across India comprising of over 141 authorized distributors as of March 31, 2021 and supplies its products to more than 40 countries.
Promoters & Shareholding:
Sanjive Sehgal and Rohan Sehgal are the company promoters.
| Pre Issue Share Holding | 50.75% |
| Post Issue Share Holding |
Public Issue Details:
Offer for sale: Fresh issue of approx. 2,265,861 equity shares of Rs. 2 aggregating up to Rs. 150 Cr and OFS of approx. 13,200,000 equity shares aggregating up to Rs. 873.47 Cr.
Total IPO Size: Rs. 1,023.47 Cr.
Price band: Rs. 635 – Rs. 662.
Objective: For Repayment/prepayment of all or certain of company’s borrowings.
Bid qty: minimum of 22 shares (1 lot) for Rs. 14,564 and maximum of 13 lots.
Offer period: 15th Nov 2021 – 17th Nov 2021.
Date of listing: 26th Nov 2021.
Also read: Market Outlook – November 2021
Pros:
- Leading Indian supplier to life sciences sector with strong brand recognition and quality products.
- It offers diverse range of labware products across varied customer segments.
- Professional and experienced management team.
- Well-equipped and automated manufacturing facilities.
- Strong sales and distribution network.
Cons:
- The company imports over 75% of our raw materials and any delay, interruption, or reduction in the supply of raw materials will impact its business.
- Non-compliance with and changes in, safety, health, environmental and labour laws and other applicable regulations, may adversely affect its business.
- Volatility in raw material prices will affect its business.
Subscribe or avoid?
Sectorial outlook – The Indian healthcare market has witnessed a growth of 9.1% in 2020 to reach $198 Bn and it is expected to register a huge growth of ~23% between 2020-2025 to reach $557 Bn by 2025. The global laboratory equipment (glassware and plasticware) market is expected to grow at 4.9% CAGR in 2020-2025 to reach $20.5 Bn by 2025 from $16.2 Bn in 2020. This expansion is expected to be driven by investments by companies operating in the pharmaceutical sector with an aim to treat various chronic diseases. The growing prevalence of chronic diseases due to an increasing aged population in India and globally, coupled with government initiatives for manufacturing under ‘Make in India’ and the global need for lower-cost therapies at high quality has led to health investments from healthcare players, fostering the development of the healthcare industry is expected have positive impact on the company and its business.
The financials (revenue and net profit) are shown in the graph below:
Valuation – For the last 3 years average EPS is Rs. 10.55 and the P/E is around 62x. On the upper price band of Rs 662 and EPS of Rs. 13.43 for FY21, the P/E ratio works out to be 49x. There are no listed peers. The company is P/E is between 62x and 49x, the listing seems to be reasonably priced because the company has shown good revenue as well as strong margin growth.
Recommendation – After considering all the factors we would recommend investors to “SUBSCRIBE” to this IPO for long term and medium-term perspectives.
Disclaimer:
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