Tarsons products IPO subscribed more than once on day 2

Ipsita

Tarsons Products Ltd (TPL), incorporated in 1983, is a leading Indian life sciences company involved in the production and supply of labware products.

Tarsons Products is raising funds for repayment or prepayment of full or partial borrowings of up to Rs 78.54 crore, to fund the capital expenditure for a new manufacturing facility at Panchla, West Bengal, and also for general corporate purposes.

The initial public offer (IPO) of Tarsons Products continued to see a strong response from investors on the second day of the bidding process on Tuesday. The issue was fully subscribed to on Monday itself. As of 5:00 pm, the issue garnered 3.6 times bids. It received applications for 3,88,07,802 shares so far against on offer 1,08,44,104 shares. Retail and HNIs were the most enthusiastic about the issue.\

The institutional investor category was subscribed 1.30 times while the non-institutional category comprising high net worth individuals was subscribed 398% or 3.98 times.

Retail investors, whose investments cannot exceed ₹2 lakh per individual, subscribed to 4.74 times of the 5.39 million shares on offer, data showed.

The majority of the brokerages are positive over the issue of the Kolkata-based company and have suggested investors bid for the IPO for listing pop and long-term gains.

The IPO is valued at 51x FY21 earnings and 35.5x FY22 annualized earnings, which look to be reasonably priced. Given an increased health awareness among people post Covid-19, a 10.5 per cent CAGR expectation of the global plastic laboratory products market over FY20-FY25, high market share of plastic labware and expansion programmes, we believe TPL can potentially sustain healthy growth in the subsequent years,” said Vikas Jain, Senior Research Analyst at Reliance Securities.

The firm has demonstrated strong financial performance over the last two years, as rising concerns of health due to Covid-19 aided it to record a healthy demand for products. While TPL’s revenue recorded 13% CAGR during FY19-FY21, EBITDA and PAT recorded 20% and 33% CAGR, respectively, during the period.

The issue of Tarsons Products is a mix of fresh equity shares worth Rs 150 crores, with a face value of Rs 2 each, and an offer for sale (OFS) of Rs 873.47 crore by existing shareholders. The company is selling its shares in the range of Rs 635-662. Investors can bid for a minimum of 22 shares and in the multiples of thereof.

Given an increased health awareness among people post Covid-19, a 10.5% CAGR expectation of the global plastic laboratory products market over FY20-FY25E, high market share of plastic labware and expansion programmes, brokerage firm Reliance Securities believe TPL can potentially sustain healthy growth in the subsequent years.  

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