Shares of Tarsons Products Ltd on Friday listed on the exchanges at a 5.74% premium over their issue price of ₹662 apiece. Its initial public offering was subscribed over 77 times last week.
The stock opened at ₹700 and touched a high and a low of ₹764.95 and ₹634 respectively. At 10.05 am, the scrip was at ₹764.45 on the BSE, up 15.5% from its issue price.
The ₹1023.84 crore IPO is valued at 51x FY21 earnings and 35.5x FY22 annualized earnings, which look to be reasonably priced, analysts say. TPL does not have any listed peers as of now and thus it is difficult to compare valuations.
The firm manufactures a range of quality labware products which help advance scientific discovery and improve healthcare As of Mar 2021, it had a diversified product portfolio with over 1,700 SKUs across 300 products.
Domestically, it has a distribution network of 141 distributors. Globally it comprises over 45 authorized distributors and partners and supplied products to over 40 countries. Currently, it has five manufacturing facilities in West Bengal.
The firm has demonstrated a 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.
EBITDA margin has improved from 40.1% in FY19 to 45.2% in FY21 and 53% in 1QFY22. Further, the company’s cumulative operating cash flow and free cash flow stand at Rs184 crore and Rs62 crore, respectively over FY19-FY21, despite an elevated working capital cycle.
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 believes TPL can potentially sustain a healthy growth in the subsequent years.
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