Tarsons Products Limited - IPO Note

Lab Equipment

Tarsons Products Limited - IPO Note

Lab Equipment

Price range
Rs. 635-662
Issue Period:
Nov 15, 2021
Nov 17, 2021
November 16, 2021

Stock Info

CNX Nifty
Face value (Rs.)
Market lot
Issue size
Rs. 1024 cr.
Public Issue
15465000 cr. shares
Market cap post IPO
3,522 cr.
Equity Pre - IPO
5.09 cr.
Equity Post - IPO
5.32 cr.
Issue type
Fresh Issue & Offer For Sale

Shareholding (Pre IPO)

Source: Ace equity, StockAxis Research

Shareholding (Post IPO)

Source: Ace equity, StockAxis Research

Key Strengths & Strategies:

Leading supplier to life sciences sector with strong brand visibility:
In the year 2020, Tarsons had a market share of 12% of the labware market in India. Their end customers associate the brand ‘Tarsons’ with quality labware and benchtop equipment that incorporates quality, reliability and value.

Tarsons ‘PUREPACK™’ tips are individually packed to ensure sterility for each pipetting cycle. Some of their key products such as liquid handling ware, centrifuge ware and cryogenics are identified by their brand names including Maxipense, Spinwin, Cryochill, respectively. These brand names have gained prominence over the last few years and recognized by the scientific community in India.

Diverse range of Labware products:
Tarsons is among the Top-3 labware manufacturing companies in India, providing an extensive range of laboratory consumables, reusables and others product categories. With their expertise in precision manufacturing technologies, they have developed a diverse range of labware products such as pipette tips, petri dish, centrifuge tubes, cryo vials, transfer pipettes, bottles, carboys, measuring cylinder, desiccators, minicoolers, cryobox and test tube racks. As of June 30, 2021, they had a diversified product portfolio with over 1,700 SKUs products across 300 distinct products.

They have also developed customized products to suit specific requirements of their customers. They manufactured Ria vials for a CRO in India and PCR tube and strips for a diagnostics company in India, customized to their testing kit. They also manufactured a custom heavy duty bottle with capacity of 5 litres for a customer in Israel.

A large addressable market:
The life sciences industry is growing at a rapid pace on account of advancements in the field of scientific research. Laboratories have emerged 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 increasing trend of research based studies is driving the global demand for laboratory equipment.

With high penetration expected in the coming years, plastic labware is expected to replace glassware products by another 15% to reach a market share of approximately 67% in the global laboratory equipment market by Fiscal 2025, given plastic products are superior in terms of shelf life, handling, and safety benefits. As a result, the global plastic laboratory products market is expected to grow at a higher CAGR of approximately 10.50% to reach approximately USD 13.8 billion by Fiscal 2025.

Wide geographic reach through with strong distribution network:
Their distribution network across India comprises over 141 authorized distributors as at June 30, 2021. Most of their key distribution partners have been associated with them for more than the last 2 decades. For the 3 months ended June 30, 2021 and June 30, 2020 and in Fiscals 2021, 2020 and 2019, revenue generated from sales through their Top-10 distributors represented 37.45%, 41.95%, 55.90%, 54.80% and 59.70% of the revenue from operations, respectively.


High inventory levels:
Company needs to maintain high level of inventories as it has 1700 SKUs which needs to be supplied on order basis. In order to optimize the production levels, the company produces minimal quantity even if the order requires lesser quantity. Also, the company’s manufacturing base in concentrated in West Bengal whereas it supplies Pan India through distributors which leads to maintaining of adequate inventory levels at various points in the system. However, the management is continuously trying to reduce the inventory days by bringing automation and higher efficiencies.

  • Promoter Holding is going below 50%: The issue includes marginal selling by promoters which is bringing the total promoter holding below 50% post the issue.
  • Geographical concentration: Company’s manufacturing facilities are concentrated in West Bengal. Such geographical concentration can pose risk to its business.
  • Company 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.

Company Description

Tarsons Products Limited is an Indian labware company engaged in the designing, development, manufacturing and marketing of consumables, reusables and others including benchtop equipment, used in various laboratories across research organizations, academia institutes, pharmaceutical companies, Contract Research Organizations (CROs), Diagnostic companies and hospitals.

Their product portfolio is classified into 3 categories: Consumable, Reusable & Others

  1. Consumables includes products such as centrifuge ware, cryogenic ware, liquid handling, PCR consumables and petri dish, transfer pipettes and others.
  2. Reusables includes products such as bottles, carboys, beakers, measuring cylinders and tube racks.
  3. Others includes benchtop instrumentation such as vortex shakers, centrifuges pipettors and others. It has a diversified product portfolio with over 1,700 SKUs across 300 products Company is one of the leading Indian companies in terms of revenue in the plastic labware market in India.

They have over 36 years of experience in life sciences through which they gained expertise in the production of a wide range of labware products. Company have received CE-IVD certificate for their products such as micro and macro tips, cryo vials and centrifuge tubes.

Company supplies their products to over 40 countries across both developed and emerging markets through a blend of branded and ODM sales.


The company has shown stable growth in revenue in the last 3 years where they saw a minor dip in FY20 due to COVID-19. Revenue of the company has grown from Rs 178.7 cr to Rs 228.9 cr over the period of FY19 to FY21; during the same period profit has grown from Rs 39 cr in FY19 to Rs 68.9 cr in FY21. The margins of the company have grown significantly on the back of declining debt. Tarsons has good ROE aided by high margins which can sustain with growing scale of operations. Company is also planning for CAPEX which will further increase the revenues.

Tarsons has built a recognized brand in the domestic market with strong market share of 9-12% in India. company 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. There is a respectable import market for the company to capture and also a huge export opportunity arising from the “China plus one” strategy. At the upper price band of Rs 662, the PE works out to be 51x to its FY21 earnings. We recommend SUBSCRIBE to the IPO.

Key Information

Use of Proceeds:
Company is doing Fresh issue and Offer for sale. The issue of Rs 1024 cr comprise of fresh issue & offer for sale of Rs 874 cr and Rs 150 cr respectively.

The Issue will be utilized for:

  • Rs.78.5 Cr for repayment/prepayment of certain borrowings.
  • Rs. 60 Cr for funding capex to develop a new manufacturing facility in Panchla, West Bengal.
  • General corporate purposes.

Book running lead managers:
Edelweiss Financial Services Ltd, ICICI Securities Limited, SBI Capital Markets Limited

Sanjive Sehgal is the Chairman and Managing Director of the company. He has over 30 years of experience in the company. He has been the Managing Director of the company from July 26, 2018. Rohan Sehgal is the Whole-Time Director of the company. He has over 7 years of experience in the company. He has been the Whole Time Director of the company from July 25, 2018.

Financial Statement

Profit & Loss Statement:- (Consolidated)

Particulars (Rs. in Crores) FY19 FY20 FY21
Revenue from Operations 178.75 175.90 228.91
COGS 50.99 48.67 61.51
Gross Profit 127.76 127.23 167.41
Gross Margin (%) 71.48% 72.33% 73.13%
Employee Benefit Expenses 16.14 20.09 24.44
Other Expenses 39.96 37.89 39.53
EBITDA 71.67 69.25 103.44
EBITDA Margin (%) 40.09% 39.37% 45.19%
Depreciation 14.56 14.17 13.66
EBIT 57.10 55.08 89.78
EBIT Margin (%) 31.95% 31.32% 39.22%
Finance Cost 7.25 6.10 2.72
Oher Income 5.97 4.15 5.38
Profit Before Exceptional Items & Tax 55.83 53.13 92.43
Exceptional Items - - -
Profit Before Tax 55.83 53.13 92.43
Tax 16.87 12.60 23.56
Effective Tax Rate (%) 30.21% 23.72% 25.49%
Profit After Tax 38.96 40.53 68.87
PAT Margin (%) 21.79% 23.04% 30.09%
Earnings Per Share (Rs.) 7.50 7.75 13.43