Read here to know how this labware manufacturer has fared post listing.
23-Mar-2022 •Karthik Anand Vijay
Tarsons Products came out with its IPO about four months ago, and you can find our detailed analysis of the issue here. In this update, we will look at the company's market performance and business performance post issue.
Our analysis of the IPO
We gave a score of 20 out of 26 to this plastic labware manufacturer. Tarsons Products supplies plastic labware for use within molecular biology, cell culture, genomics, proteomics and immunology. It presently manufactures disposable plastic labware, centrifuge ware, cryo labware, liquid handling system and instruments. It is one of the few Indian companies to have a global reach in the labware market. It supplies its products to over 40 countries. It has five vertically integrated manufacturing facilities located in West Bengal.
Our rating for Tarsons Products was based on the following factors:
Stock performance since listing
Tarsons Products saw a great response to its IPO, which was oversubscribed about 78 times. The qualified institutional buyers (QIB) portion was oversubscribed 116 times, while the non-institutional investors' portion was oversubscribed 185 times and the retail portion about 11 times.
The company had a decent debut on the stock exchanges, with the shares listing 5.7 per cent over its issue price, opening at Rs 700 and ending the day at Rs 840. Post listing, the stock has moved up and down. It reached a high of Rs 929 on the next day of listing and a low of Rs 570 per share on February 28, 2022. As of March 21, 2022, the stock closed at Rs 673, which is about 1.7 per cent higher than its issue price of Rs 662.
In Q3 FY22, the revenue was Rs 70.7 crore, a growth of 17.3 per cent YoY. Profit after tax grew by 2 per cent YoY to Rs 21.5 crore. The growth in profit after tax was not commensurate to the growth in revenue because of a higher cost of materials and other expenses. For the nine months ended December 2021, the company's revenue and profit after tax grew by 19 per cent and 57.1 per cent, respectively.
Revenue contribution from exports increased from 31 per cent in Q3 FY21 to 41 per cent in Q3 FY22. Tarsons Products achieved its full-year FY21 profitability (Rs 68.9 crore) in the nine months ended December 2021 (Rs 71.2 crore).
What to do now?
The management is optimistic about the demand scenarios from both domestic and overseas markets. Its diversified product portfolio enables its customers to source most of their product needs from a single source. Going forward, the company is focusing on enhancing and expanding its product portfolio. The company's expansion plans with the new facility and the upgradation of existing facilities are on track and are expected to be operational by the middle of FY23.
Tarsons Products is poised to benefit from the shift from glassware to plasticware in the laboratory equipment market. However, whether you as an investor would also capture that growth depends on the valuation that you enter in. Since its listing in November, the company has traded at a P/E between 46-65 times. It currently trades at a P/E of about 52 times. Keep this one on your watch list.
Disclaimer: This analysis is not meant to serve as a recommendation. Do your research before investing in the company. If you are interested in our stock recommendations, please visit Value Research Stock Advisor.
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