Please refer to important disclosures at the end of this report
1
Tarsons Products Ltd is a leading Indian manufacturing company by revenue in
India in laboratory consumable and life sciences industry with ~9-12% market
share in the labware market in 2020 (Frost & Sullivan Report). Tarsons’ product
portfolio is classified into three key categories which include Consumables,
Reusables, and Others. The company generated ~23% of its revenue from the sale
of Reusables in FY21 while 5-7% of its revenue from others segment. Tarsons
currently operates five manufacturing facilities in West Bengal as of June’21 and
had a diversified product portfolio with over 1,700 SKUs products across 300
distinct products. Its distribution network across India comprises over 141
authorized distributors and has 45 distributors in the overseas market. Some of its
end customers include Dr Reddy's Laboratories, Syngene International Dr. Lal Path
Labs, Metropolis Healthcare, Mylab Life Solutions, among others.
Positives: (a) Leading Indian supplier to life sciences sector with strong brand
recognition and quality products. (b) Provides a diverse range of labware products
across varied customer segments. (c) large addressable market with long-standing
relationships with key end customers. (d) pan India sales and distribution network.
Investment concerns: (a) Company imports over 75.00% of its raw materials. (b)
86.32% of total manufacturing revenue contributed by manufacturing units located
at Dhulagarh and Jangalpur, WB. (c) Moderate scale of operations, working
capital intensive in nature of business (high inventory and low payable days) (d)
Continuing impact of the COVID-19.
Outlook & Valuation: Tarsons has been manufacturing plasticware for over 36
years and has built a recognized brand in the domestic market. Although the scale
of operations is modest, the same as grown over the years aided by diversified
portfolio and distribution network. Tarsons’ is well placed to capture the growth
arising from shift from glassware to plastic ware, growth for end users and,
continued gains for domestic manufacturers among others. Tarsons has good ROE
aided by hi margins which can sustain with growing scale of operations. The IPO
proceeds will enable Tarsons to invest in capacities to capture growth going ahead.
At `662, Tarsons is commanding 51.1x/40.6x FY21/TTM earnings. Given 33%
earnings CAGR over FY19-21 and potential to maintain such earnings growth, we
believe the valuations are fair. We have a “SUBSCRIBE” rating on the issue.
Key Financials
Y/E March (` cr)
FY2019
FY2020
FY2021*
Q1FY21
Q1FY22*
Net Sales
179
176
229
42
69
% chg
-
-1.6
30.1
-
64.6
Reported Net Profit
53
52
80
10
26
% chg
-
-1.4
53.5
-
172.7
EBITDA (%)
48.0
46.1
50.2
33.7
55.0
EPS (`)
7.3
7.6
12.9
1.3
4.7
P/E (x)
90.4
86.9
51.1
-
-
P/BV (x)
26.0
17.8
14.4
-
-
ROE (%)
57.6
24.4
31.2
-
-
ROCE (%)
44.0
20.8
27.7
-
-
EV/EBITDA
50.0
51.0
34.3
-
-
EV/Sales
20.1
20.1
15.5
-
-
Source: Company, Angel Research;
Note: Valuation ratios at upper price band; *Consolidated
SUBSCRIBE
Issue Open: Nov 15, 2021
Issue Close: Nov 17, 2021
Offer for Sale: `874 cr
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 47.3%
Others 52.7%
Fresh issue: `150 cr
Issue Details
Face Value: `2
Present Eq. Paid up Capital: `10.2 cr
Post Issue Sha reholding Pattern
Post Eq. Paid up Capital: `10.2cr
Issue size (amount): `1,023 cr
Price Band: `635-662
Lot Size: 22 shares and in multiple thereafter
Post-issue mkt. cap: * `3,385 cr - ** `3,522 cr
Promoters holding Pre-Issue: 50.78%
Promoters holding Post-Issue: 47.3%
*Calculated on lower price band
** Calculated on upper price band
Book Building
TARSONS PRODUCTS LTD
IPO NOTE TARSONS PRODUCTS LTD.
November 12, 2021
November 12, 2021
2
Tarsons Products Limited| IPO Note
Company background
Tarsons Products Ltd is an Indian labware company engaged in designing,
development, manufacturing, and marketing of consumables, reusables and
others including benchtop equipment, used in various laboratories across research
organizations, academia institutes, pharmaceutical companies CROs, diagnostic
companies and hospitals. 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.
Tarsons is also engaged in the manufacturing of a range of quality labware
products which helps scientific discovery and improve healthcare. Tarsons currently
operates through our five manufacturing facilities located in West Bengal. Tarsons
distributes its products to its end customers on a pan-India basis through
authorised distributors. The company is among the top three plasticware
laboratory equipment manufacturing companies by revenue in India to provide
extensive range of life science products, scientific equipment, and scientific
instruments and both general and specialized laboratory supplies
Issue details
The IPO is made up of fresh issue of `150 Cr and offer for sale of up to 1.32 Cr
shares by promoter & selling shareholders.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
2,58,66,033
50.78
2,51,66,033
47.30
Public
2,50,74,387
49.22
2,80,40,248
52.70
Total
5,09,40,420
100.00
5,32,06,281
100.00
Source: Company, Angel Research & RHP.
Objectives of the Offer
`78.5 Cr for repayment/prepayment of certain borrowings.
`60 for funding capex to develop a new manufacturing facility in Panchla,
West Bengal
General corporate purposes
Key Management Personnel
Sanjive Sehgal is the Chairman and Managing Director and individual Promoter of
the company. He holds a bachelor’s degree in science from Xavier College,
Calcutta. He has over 30 years of experience in the company.
Rohan Sehgal is the Whole-Time Director and individual Promoter of the
Company. He holds a bachelor’s degree in science (management) from the
University of Manchester. He has over 7 years of experience in the company.
Santosh Agarwal is the Chief Financial Officer of the company. He holds a
B.Com degree from the University of Calcutta. He is a Chartered Accountants
and has over 20 years of experience having previously worked with Polar
Fans, Genpact, ICA group and Gruas Jaso Group.
November 12, 2021
3
Tarsons Products Limited| IPO Note
Exhibit 1: Profit & Loss Statement
Y/E March (` Cr)
FY2019
FY2020
FY2021*
Q1FY21
Q1FY22*
Total operating income
179
176
229
42
69
% chg
-
-1.6
30.1
-
64.6
Total Expenditure
93
95
114
28
31
Cost of materials consumed
56
50
56
12
18
Changes In Inventories
(5)
(1)
5
5
(5)
Employee benefits expense
16
20
24
6
8
Other expenses
40
38
40
8
12
EBITDA
72
69
103
12
37
% chg
-
-3.4
49.4
-
218.5
(% of Net Sales)
40.1
39.4
45.2
27.5
53.2
Depreciation& Amortization
15
14
14
3
5
EBIT
57
55
90
8
32
% chg
-
-3.5
63.0
-
284.6
(% of Net Sales)
31.9
31.3
39.2
19.9
46.6
Finance costs
7
6
3
1
1
Other income
6
4
5
2
2
(% of Sales)
3.3
2.4
2.4
3.7
2.9
Recurring PBT
50
49
87
8
31
% chg
-
-1.8
77.7
-
302.5
Exceptional item
-
-
-
-
-
Tax
17
13
24
2
9
PAT (reported)
39
41
69
7
25
% chg
-
4.0
69.9
-
256.5
(% of Net Sales)
21.8
23.0
30.1
16.6
35.9
Basic & Fully Diluted EPS (Rs)
7.3
7.6
12.9
1.3
4.7
Source: Company, Angel Research; Note - *Consolidated
November 12, 2021
4
Tarsons Products Limited| IPO Note
Exhibit 2: Consolidated Balance Sheet
Y/E March (` Cr)
FY2019
FY2020
FY2021*
Q1FY21
Q1FY22*
SOURCES OF FUNDS
Equity Share Capital
0
0
0
0
10
Other equity
135
197
244
182
259
Shareholders’ Funds
135
198
244
182
269
Total Loans
65
36
34
35
65
Other liabilities
4
5
6
5
8
Total Liabilities
204
238
284
222
341
APPLICATION OF FUNDS
Property, Plant and Equipment
85
88
114
85
127
Right-of-use assets
4
4
7
4
7
Capital work-in-progress
7
19
22
24
33
Intangible assets
-
-
-
-
1
Non-Current Investments
-
-
-
-
-
Other Non-Current Asset
19
18
41
24
56
Current Assets
97
120
113
98
141
Inventories
46
49
47
46
59
Investments
-
-
-
-
-
Trade receivables
45
38
47
36
49
Cash and Cash equivalents
1
26
3
2
14
Loans & Other Financial Assets
0
0
0
0
1
Other current assets
5
7
16
14
18
Current Liability
8
10
12
13
23
Net Current Assets
89
110
101
85
118
Total Assets
204
238
284
222
341
Source: Company, Angel Research; Note - *Consolidated
November 12, 2021
5
Tarsons Products Limited| IPO Note
Exhibit 3: Consolidated Cash flows
Y/E March (`cr)
FY2019
FY2020
FY2021*
Q1FY21
Q1FY22*
Operating profit
56
53
92
9
33
Net changes in working capital
(9)
6
(16)
1
(10)
Cash generated from operations
21
20
16
3
4
Direct taxes paid (net of refunds)
(17)
(15)
(24)
(3)
(4)
Net cash flow from operating activities
51
64
68
11
23
Purchase of Assets
(34)
(26)
(64)
(11)
(42)
Interest received
0
1
0
0
0
Others
0
0
0
(0)
(0)
Cash Flow from Investing
(34)
(25)
(64)
(11)
(42)
Repayment (long term borrowings)
(30)
(11)
(7)
(2)
10
Repayment (short term borrowings)
(5)
2
7
1
21
Proceeds from issue/repayment CCDs
22
-
(22)
(22)
-
Interest paid
(6)
(5)
(5)
(1)
(1)
Interest on Lease liabilities
(0)
(0)
(0)
-
(0)
Dividend Paid
(0)
0
(0)
(0)
(0)
Cash Flow from Financing
(18)
(14)
(27)
(23)
30
Inc./(Dec.) in Cash
(0)
25
(23)
(23)
11
Acquisition
-
-
-
-
-
Opening Cash balances
1
1
25
25
2
Closing Cash balances
1
25
2
2
13
Source: Company, Angel Research; Note - *Consolidated
November 12, 2021
6
Tarsons Products Limited| IPO Note
Key Ratios
Y/E March
FY2019
FY2020
FY2021*
Valuation Ratio (x)
P/E (on FDEPS)
90.4
86.9
51.1
P/CEPS
65.8
64.4
42.7
P/BV
26.0
17.8
14.4
EV/Sales
20.1
20.1
15.5
EV/EBITDA
50.0
51.0
34.3
Per Share Data (Rs)
EPS (Basic)
7.3
7.6
12.9
EPS (fully diluted)
7.3
7.6
12.9
Cash EPS
10.1
10.3
15.5
Book Value
25
37
46
Returns (%)
ROE
57.6
24.4
31.2
ROCE
44.0
20.8
27.7
Turnover ratios (x)
Receivables (days)
91
79
75
Inventory (days)
333
365
277
Payables (days)
14
44
35
Working capital cycle (days)
409
400
317
Source: Company, Angel Research
November 12, 2021
7
Tarsons Products Limited| IPO Note
Research Team Tel: 022 - 40003600
E-mail: research@angelbroking.com
Website: www.angelone.in
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Disclosure of Interest Statement
1.Financial interest of research analyst or Angel or his Associate or his relative No
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Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15%)
Hold (Fresh purchase not recommended)
