Buy Stocks Of This Plastic Manufacturing Company, For 25% Upside: HDFC Securities Recommends

Renowned brokerage firm HDFC Securities has recommended investors look forward to the stocks of Tarsons Products Ltd. (TPL). The firm said, "Plastic labware products are expected to grow at CAGR of 10.5% over 2020-2025 as compared to overall 4.9% growth in labware products, thereby increasing its share to 67% from 52% currently." This can eventually positively impact the said company's stock prices.

Target Price

The Current Market Price (CMP) of Tarsons Products is Rs. 645.50. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 809. Hence the stock is expected to give a 25.33% return, within 4-6 quarters

Stock Outlook
Current Market Price (CMP)	Rs. 645.50
Target Price	Rs. 809
4-6 quarters returns	25.33%

Company performance

In FY 21, Tarsons Products recorded an Rs. 229 crore revenue with a 30.1% growth. EBITDA stood at Rs. 103 crore, with an Rs. 69 crore PAT. "We expect TPL's revenue/EBITDA/PAT to grow at 23/31/32% CAGR over FY21-FY24, led by increasing demand and expand footprint in domestic and global markets. Due to increasing tariffs levied by the US and tightening of environmental protection norms on Chinese goods, India is proving to be a cost-effective manufacturing alternative and domestic Indian players are expected to gain share over time," HDFC mentioned. In FY21 exports accounted for ~33% of total sales.

Comments by HDFC Securities

Maintaining a buy rating, HDFC Securities said, "TPL is expanding its footprint both in the domestic market as well as overseas markets. TPL is a unique player in an industry dominated by MNCs which largely import and sell their products. The labware product market in India has grown significantly in recent times due to increasing incidences of acute and chronic diseases, the rising need for timely and accurate disease diagnosis, the growing healthcare sector, etc. There are high entry barriers and forging strong relationships with distributors/ultimate users is key to business growth."

About the company

Tarsons Products Ltd. (TPL) is among the leading companies to manufacture and supply laboratory plasticware products. Its products are used by laboratories engaged in molecular biology, cell culture, genomics, proteomics, and immunology. The company has a diversified product portfolio with over 1,700 SKUs across 300 products. In FY21, ~30% of the revenue was on account of Covid related sales.

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Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.