Kolkata based Tarsons Products is coming up with an IPO that would open for subscription on 15th November 2021. Tarsons Products Limited is a leading life sciences company in India which in the production and supply of Labware products. The company has stable revenues in the last 3 years. It has generated strong margins in the last 3 years. Should you invest in Tarsons Products IPO? What are the risk factors in this IPO? Let me do IPO review and indicate whether investors should buy or not.
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About Tarsons Products Limited
The company is an Indian Labware company engaged in the designing, development, manufacturing and marketing of consumables, reusables and others including benchtop equipment. These are used in various laboratories across research organizations, academia institutes, pharmaceutical companies, contract research organizations, diagnostic companies and hospitals.
Company manufacture a range of quality labware products which helps advance scientific discovery and improve healthcare. Company has diversified product portfolio with over 1,700 SKUs across 300 products.
Its products are classified into 3 key categories 1) Consumables 2) Reusables and 3) Others
Consumable’s category includes products such as centrifuge ware, cryogenic ware, liquid handling, PCR consumables etc.,
Reusable category includes products such as bottles, carboys, beakers, measuring cylinders and tube racks.
Other’s category includes benchtop instrumentation such as vortex shakers, centrifuges Pipettors and others.
Company operates through its 5 manufacturing facilities located in West Bengal.
Tarsons Products IPO details
|IPO Opening Date||15-Nov-21|
|IPO Closing Date||17-Nov-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 2 per equity share|
|IPO Price band||Rs 635 to Rs 662 per equity share|
|Lot Size||22 Shares|
|Min Order Quantity||22 Shares|
|Listing at||BSE and NSE|
|Issue Size||Total Rs 1,023.47 Crores
1) Fresh Issue – Rs 150 Crores
2) OFS – Rs 873.47 Crores
|Book Running Lead Managers||ICICI Securities, Edelweiss Financials and SBI Capital Markets|
|Employee Discount||Rs 61 per share|
Tarsons Products IPO RHP Prospectus
What are Tarsons Products strengths?
1) Company is a leading supplier of life sciences products
2) It has extensive product offering
3) Large addressable market of life sciences industry
4) Well-equipped and automated manufacturing facilities
5) Strong sales and distribution network
6) Experienced Promoter backed by a strong management team
What are the Objects of the IPO Offer?
Tarsons Products IPO Size is Rs 1,023.47 Crores, out of which
1) Offer for Sale (OFS) for Rs 873.47 Crores – Under OFS, selling shareholders would sell their shares and company would not get any money from this IPO proceeds.
2) Fresh issue for Rs 150 Crores – These proceeds would be used for the following:
Repayment/prepayment of all or certain of the company’s borrowings;
Funding a part of the capital expenditure for new manufacturing facility at Panchla, West Bengal (proposed expansion) and;
General corporate purposes
Who is the promoter of Tarsons Products Limited?
Sanjive Sehgal and Rohan Sehgal are the promoters of the company.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years.
Financial Year ending / Period ending (Amt in Mns)
|Particulars||FY19 (Standalone)||FY20 (Standalone)||FY20 (Consolidated)||Q1 FY22 (Consolidated)|
|Profit After Tax||389.6||405.3||688.7||248.4|
Why to invest in Tarsons Products IPO?
Here are the positive factors in this company.
1) The company is one of the India’s leading suppliers of life science products. Company has wide product portfolio and large addressable market of life science industry.
2) Company has good revenue growth in the last 3 years and 3 months. It generated revenue of Rs 184.7 Crores in FY19 (Standalone) Vs. Rs 234.2 for FY21 (Consolidated).
3) Company has good margins of over 21% in the last 3 years. These margins are improving year on year too. It generated profits of Rs 38.9 Crores (21%) for FY19 (Standalone) Vs. Rs 68.8 Crores (29.4%) for FY21 (Consolidated).
4) Company employees would get a discount of Rs 61 per share (9.2%) if they apply through this IPO.
Risk Factors in Tarsons Products IPO
1) Over 85% of the IPO proceeds would go to selling shareholders. Such IPO proceeds would not help a company getting benefitted for the future.
2) Company intends to utilize the fresh proceeds for the civil works for building a new manufacturing facility in Panchla, West Bengal. They are yet to place orders for such civil construction.
3) Company’s end customers expect them to maintain high quality of standards and failure to comply would affect company business.
4) Company imports over 75% of its raw materials. Any delay, interruption or reduction in supply of raw materials to manufacture its products can adversely affect its business.
5) Company’s manufacturing facilities are concentrated in West Bengal. Such geographical concentration can pose risk to its business.
6) Many countries, including India has joined in the efforts to ban plastic products. In case of plastic products manufactured by the company are banned in India or any markets where the company exports its products can have a material and adverse effect on its business.
7) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Tarsons Products IPO dates for subscription, Allotment and Listing
|Finalization of Allotment||23-Nov-21|
|Initiation of Refunds||24-Nov-21|
|Credit to Demat Account||25-Nov-21|
|IPO Shares Listing Date||26-Nov-21|
Is Tarsons Products IPO Price is underpriced or overpriced?
Tarsons Products share price band is Rs 635 to Rs 662 per share.
1) If we take last 3 years weighted average EPS of Rs 10.55 and the upper price band of Rs 662, the P/E ratio works out to 62x.
2) If we take FY21 EPS of Rs 13.43 and the upper price band of Rs 662, the P/E ratio works out to 49x.
3) If we take Q1 FY22 EPS of Rs 4.88 and annualize for FY22, the P/E works out to be 34x.
4) Means company is asking IPO price in the P/E range of 34x to 62x.
As per RHP there are no listed peers doing similar business, hence we cannot conclude whether the issue price is underpriced or overpriced. However, P/E of 34x to 62x in general can be considered as fully priced.
What is Tarsons Products IPO Grey Market Premium?
GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market.
Currently Tarsons Products IPO GMP is not available as there is no trading’s happening as of the day of writing the article.
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Tarsons Products IPO – Review and Conclusion
You might be wondering, should I buy Tarsons Products IPO or not?
Company generated strong revenue growth in the last 3 years.
Company has strong margins growth in the last 3 years. These margins are improving year on year too.
The IPO price is fully priced.
Considering all these parameters, investors can invest in this IPO for medium to long term.
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Tarsons is available at huge discount right now. Should one invest in it or wait for further correction?
I have been following Suresh k.p analysis regularly and following his inputs and it helped me.
Thank you Suresh for your analysis, inputs and guidance.