Tarsons Products IPO Opens Next Week. Things to Know Before Applying

The initial share sale of life sciences company Tarsons Products will open for public subscription on 15 November 2021. The three-day initial public offering (IPO) will conclude on 17 November 2021.

The price band of the offer has been fixed at Rs 635 to Rs 662 per equity share of face value of Rs 2 each.

The IPO will be a combination of fresh issue and offer for sale (OFS). The fresh issue size will be Rs 1.5 bn while the OFS will be worth Rs 8.7 bn. This will take the total issue size to Rs 10.2 bn.

Tarsons Products is engaged in designing, developing, manufacturing and supplying a diverse range of quality lab-ware products used in laboratories across research organisations, academic institutes, pharmaceutical firms, diagnostics companies, and hospitals.

ICICI Securities, Edelweiss Financial Services, and SBI Capital Markets are the book running lead managers to the offer.

Tarsons Products IPO Details

Issue Type	Book Built Issue IPO
Face Value	Rs 2 per equity share
IPO Price	Rs 635 to Rs 662 per equity share
Market Lot	1 lot - 22 shares
Issue Size	Rs 10.2 bn
Fresh Issue	Rs 1.5 bn
Offer for Sale	Rs 8.7 bn
Basis of Allotment Date	Tuesday, November 23, 2021
IPO Listing Date	Friday, November 26, 2021

Data Source: Company's Red Herring Prospectus (RHP)

As a part of the OFS, promoters - Sanjiv Sehgal will offload up to 3.9 lakh equity shares and Rohan Sehgal will sell up to 3.1 lakh equity shares and investor Clear Vision Investment Holdings will divest up to 12.5 m equity shares.

Category-wise reserved portion

The public issue will include a reservation of 60,000 equity shares for employees.

Half of the issue size has been reserved for qualified institutional buyers (QIB), 15% for non-institutional investors, while 35% has been set aside for retail investors. Investors can bid for a minimum of 22 shares and in multiple thereof.

Use of IPO funds

Tarsons Products plans to utilise the net proceeds from the fresh issue for repayment or prepayment of its borrowings, funding a part of the capital expenditure for the new manufacturing facility at Panchla, West Bengal and for general corporate purposes.

About Tarsons Products

Tarsons Products is a leading Indian life sciences company with more than three decades of experience in the production and supply of labware products.

The company manufactures a range of quality labware products that helps advance scientific discovery and improve healthcare systems.

Its product portfolio is classified into three broad categories including consumables, reusables, and others. As of 31 March 2021, the company has a diversified product portfolio with over 1,700 stock keeping units (SKUs) across 300 products.

The company's products are used in various laboratories across research organizations, academic institutes, pharmaceutical companies, contract research organisations (CRO), diagnostic companies, and hospitals. The company has many reputed institutes, medical labs, and hospitals as its key clients.

Company's reach

Currently, the company has 5 manufacturing facilities located in West Bengal spread across approximately 20,000 square meters of area.

The company has a strong distribution network across India comprising of over 141 authorised distributors as of 31 March 2021 and supplies its products to more than 40 countries.

Financial snapshot of the company

Tarsons Products has witnessed good revenue growth in the last 3 years and 3 months.

It generated revenue of Rs 2.3 bn in the financial year 2021. The 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 688.7 m for the fiscal year 2021.

Key Financial Parameters

(Rs m)	FY19	FY20	FY21
Revenues	1,787.5	1,759	2,289
Revenue Growth (%)		-1.6%	30.1%
Expenses	1,288.9	1,269.2	1,418.6
Net Profit	389.6	405.3	688.7

Data Source: Company's RHP

For more details, check out Tarsons Products' Red Herring Prospectus.

Here are the Positive Factors in this Company

• Tarsons Products is one of the India's leading suppliers of life science products. The company has wide product portfolio and large addressable market of life science industry.
• The company has generated stable revenues in the last 3 years and has strong margin records in the last 3 years.
• Health-related segments have expanded post-pandemic, this augurs well for the company.
• The company enjoys strong sales and distribution network.
• For the time being, Tarsons Products does not have any listed comparable peer as per the offer documents.

Key Risk Factors

• The company intends to utilise 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.
• The firm 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.
• Tarsons Products manufacturing facilities are concentrated in West Bengal. Such geographical concentration can pose risk to its business.
• 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.

IPO market is booming in India. Will the trend continue?

The Indian stock market is still currently trading high and IPOs are attracting some wild valuations.

Given the abundant liquidity, the market regulator easing listing procedures and overall bullish sentiments, the IPO craze is understandable.

Data suggests that companies raised funds to the tune of US$ 4.6 bn from IPOs last year. The market believes this amount will be easily surpassed in 2021.

As companies line up to raise funds from the market amid high valuations, investors need to consider many factors before investing their money in an IPO.

If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.

Take a close look at the company's financials and valuations. It would give you a clear picture of what's brewing.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more here...