Tarsons Products IPO Opens Today: Should You Subscribe?

Amid IPO rush and strong IPO debuts like as in the case of Nykaa and Sigachi Industries, investors with investible surplus may be analyzing the various investment avenues including IPOs. So, here we provide with key details on the issue of Tarsons Products that opens today (November 15, 2021) for public subscription.

Tarsons Products IPO Opens Today: Should You Subscribe?

1. Issue details:

The issue by the life sciences company is open for public subscription until November 17, 2021. For, the Rs. 1024 crore IPO, price band has been decided at Rs. 635-662 per share. Ahead of its issue, from the anchor investors the company raised Rs. 306 crore.

The issue includes fresh equity issuance worth Rs. 150 crore plus an offer for sale (OFS) of 1.32 crore shares aggregating to Rs. 873 crore by existing shareholders.

Minimum bid size: 22 shares

2. Issue objectives:

The proceeds from the issue shall be put towards paying debt, financing capex for the new facility at Panchla in West Bengal, and other general corporate purposes.

3. Company details:

The company incorporated in the year 1983 is into designing, developing, manufacturing as well as supplying a gamut of quality labware products used in labs across places such as research organisations, academic institutes, pharmaceutical firms, diagnostics companies and hospitals. The company's high-end quality labware products facilitates in advancing scientific research and improving healthcare.

4. Financials of Tarsons Products:

The company has a sound financial track record with some of the key metrics including ROE, ROCE and operating margins being decent. Good cash flow situation, expansionary mode as well as plans on becoming a debt free company also hold good. The revenues at the company scaled to Rs. 234 crore during the period 2019-21 from Rs. 184.7 crore, while bottom line also saw an increase to Rs. 69 crore. Also, on the back of declining debt, margins of the company have improved significantly.

5. Brokerages' take on the issue of Tarsons Products:

Brokerages in general are of the view that there are no entities listed on Indian bourses whose business portfolio can be compared with that of Tarsons together with its scale of operations.

"With respect to its performance in FY20, its business and profitability increased drastically in the pandemic year. However, we believe that the current business growth and profitability expansion is not sustainable. There is a respectable import market for the company to capture and also a huge export opportunity arising from the 'China plus one' strategy, in case the globe adopts this strategy in the post-Covid period. Thus considering the future growth outlook and the demanded premium valuation, we assign a 'Subscribe with Caution' rating for the issue," said Choice Broking.

On the other hand Marwadi Shares and Finance has a 'Subscribe' rating on the issue and said considering the TTM in June 2021 adjusted EPS of Rs 16.30 on post-issue basis, the company is going to list at a P/E of 40.61 with a market cap of Rs 3,522.3 crore. "The company is a leading Indian supplier to the life sciences sector with strong brand recognition quality products, and provides a diverse range of labware products. It is available at reasonable valuation on an absolute basis," it added.

Canara Bank Securities also recommends to 'Subscribe' to the issue of Tarsons for both listing as well as long term gains and says "On the back of growing labware industry and being a key industry supplier, the company has potential to grow business going forward". Robust financials, strong return ratios and company's debt free status post the IPO also hold good.

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