Tarsons Products IPO Subscribed 44% On Day 1: Key Things To Know

Edited by Prashun Talukdar

15 Nov 2021, 12:11 PM IST

Tarsons has fixed a price band of Rs 635-662 a share for its Rs 1,024 crore initial share sale.

New Delhi: The initial public offering (IPO) of labware company Tarsons Products received bids for 48.17 lakh equity shares out of 1.08 crore up for sale, subscribing 44 per cent on the first day. The issue closes on November 17.

The portion set aside for retail investors was subscribed 89 per cent while non-institutional investors portion was subscribed 1 per cent. Employees, for whom 60,000 equity shares are reserved, have put in bids of 1,276 shares.

So far, qualified institutional buyers are yet to place a bid.

The initial share sale comprises a fresh issue of equity shares worth Rs 150 crore and an offer-for-sale of 1.32 crore shares by promoters and an investor.

Tarsons has fixed a price band of Rs 635-662 a share for its Rs 1,024 crore initial share sale. Investors can bid for a minimum of 22 shares and in multiples of it thereof.

As per draft documents, proceeds from the fresh issue will be used to pay debt, fund part of the capital expenditure for the new manufacturing facility at Panchla in West Bengal and general corporate purposes.

ICICI Securities, Edelweiss Financial Services and SBI Capital Markets are the lead managers to the issue; while KFintech Private Limited is the registrar.

Should You Subscribe?

"At the upper end of the IPO price band, Tarsons Products is offered at P/E (price - earnings ratio) of 40.7 times its TTM (trailing twelve months) earnings, with a market capitalization of Rs 35,22.2 crore. The company is a leading supplier to life sciences sector, with diverse range of labware products across varied customer segments in an industry which has large addressable market. The company has high profit margins and also reported RoNW (return on net assets) of 28.19 per cent in FY21, however valuation is on the higher side, hence we give this IPO a "Subscribe (Long Term)" rating," Brokerage firm Anand Rathi stated.

"At the higher end of the price band, Tarsons Products is reasonably priced at a P/E ratio of 36 times annualised FY22 earnings (fully diluted on a post-issue basis). The company does not have any immediate listed peers to compare with. Given the company's steady rise in topline, good growth in bottomline, healthy margins, robust return ratios and reasonable valuations, we remain 'positive' on the long-term prospects of this issue," SEBI-registered investment advisor INDmoney said in a report.