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Some of the end customers include Indian Institute of Chemical Technology, National Centre for Biological Sciences across academic institutes and research organizations; Dr Reddy's Laboratories, Enzene Biosciences across pharmaceutical sectors; Syngene International, Veeda Clinical Research across CROs; and Molbio Diagnostics, Agappe Diagnostic, Metropolis Healthcare, Dr. Lal Path Labs, Mylab Life Solutions across other sectors such as diagnostics.
An increasing trend can be seen in the financial performance of the company in terms of margins and revenues. The total revenues for Q1FY21 were Rs 71.13 crore and Tarson posted PAT of Rs 24.84 crore. The consolidated revenues increased to Rs 234.29 crore in FY21 from Rs 180.05 crore (standalone) in FY20. The Issuer recorded PAT of Rs 68.87 crore in FY21 and Rs 40.53 crore in FY20. Profitability margins have been strong throughout the three fiscals as can be seen from the table below. It should be noted that the revenues have also increased due to the covid benefit effect with increased demand of labware during the pandemic.
Return on net worth is 28.91, 20.51% and 28.80% in FY21, FY20 and FY19 respectively. Debt to equity was 0.26 as on Q1FY22.
Title | Q1FY22 | FY2021 | FY2020 | FY2019 |
Total Revenue | 71.13 | 234.29 | 180.05 | 184.72 |
Other income | 1.98 | 5.38 | 4.15 | 5.97 |
PAT | 24.84 | 68.87 | 40.53 | 38.96 |
EBITDA | 38.74 | 108.81 | 73.4 | 77.64 |
Total Assets | 364.77 | 295.95 | 248.71 | 211.96 |
Cash from operations | 27.31 | 92.22 | 79.54 | 68.37 |
EBITDA Margin | 54.46% | 46.44% | 40.77% | 42.03% |
Net Margin | 34.92% | 29.40% | 22.51% | 21.09% |
The Issue is priced at 33.91 at annualized EPS of 19.52 calculated at the upper price band of Rs 662 per share. P/BV is 12.54x at NAV of Rs 52.80 as of the end of Q1FY22. There are no peers of the Issuer as per the RHP.
Tarson products IPO opens on 15 Nov with a fresh issue of Rs 150 crore and offer for sale of 1.32 crore shares. The price band is Rs 635-662 per share; the fresh issue proceeds would be utilized towards repayment of certain borrowings (Rs 78.54 crore) and funding CAPEX for the proposed expansion (Rs 62 crore). The Issue closes on 17 Nov and would list on 26 Nov 2021.
The life sciences industry is growing at a decent pace on account of advancements in the field of scientific research. Laboratories serve as multipurpose research facilities that host several types of testing mechanisms, novel developments, and research analogies. The need for various types of equipment across laboratories and the increasing trend of research-based studies is driving the global demand for laboratory equipment. The global laboratory equipment market is expected to register a growth of 4.90% CAGR from 2020 to 2025 to reach USD 20.5 billion by 2025 from USD 16.2 billion in 2020.
Tarson has a good financial profile with strong revenue growth and profitability margins. The challenges that the Issuer may face are over the sustainability of margins post-pandemic and greater proportion of offer for sale which puts concerns over its growth prospects. Hence an investor may subscribe for the short to medium term.
Review By CA Priyanka Choudhary on 8th Nov 2021
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.