Tarsons Products shares are expected to gain 25-30 percent when they list on the stock exchanges on November 26 after a stellar response to its initial public offering, backed by reasonable valuation, strong management and brand recognition, and healthy financials with plans to reduce debt, experts said.
The Rs 1,023.47 crore public issue received a tremendous response from investors during November 15-17. The IPO consisted of a fresh issue of Rs 149.63 crore and an offer for sale of Rs 873.84 crore by promoters Sanjive Sehgal and Rohan Sehgal and investor Clear Vision Investment Holdings.
The Kolkata-based company, which makes laboratory equipment for the life sciences sector, will use the fresh issue money to repay debt and set up a manufacturing facility at Panchla in West Bengal.
The offer was subscribed 77.49 times, with non-institutional investors bidding for 184.58 times the portion reserved for them and qualified institutional investors putting in bids for 115.77 times their quota. The portion for retail investors was booked 10.56 times and that of employees was subscribed 1.83 times.
The upper end of the price band of Rs 635-662 per share has been set as the final issue price.
“Considering strong demand from qualified institutional buyers and high net worth individuals for a leading Indian labware products supplier to the life sciences sector, we can expect a healthy listing of about Rs 827+, which translates to a 25 percent premium over the upper end of the IPO price of Rs 662,” said Prashanth Tapse, VP for research at Mehta Equities.
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Tapse said the healthy listing gains seem to be justified because Tarsons’ valuation was fairly priced for new investors, given its high-growth business environment and huge domestic as well as export growth potential.
Astha Jain, a senior research analyst at Hem Securities, expects the labware products maker to list at a 25 percent premium to the issue price.
One can expect 25 to 30 percent listing gains in this issue, said Likhita Chepa, a senior research analyst at CapitalVia Global Research.
Tarsons Products shares are available at Rs 832-842 in the grey market, which is a premium of Rs 170-180, or 26-27 percent, according to IPO Watch and IPO Central. The grey market is an unofficial platform for the trading of IPO shares between their price band announcement and listing on the bourses.
Tarsons Products, with over 36 years of experience, is engaged in designing, developing, manufacturing and supplying a diverse range of quality labware products used in laboratories across research organisations, academic institutes, pharmaceutical firms, diagnostics companies and hospitals.
The company reported a consolidated profit after tax of Rs 68.87 crore on revenue of Rs 228.91 crore in FY21. Consolidated profit stood at Rs 24.83 crore on revenue of Rs 69.15 crore in the quarter ended June.
The company also supplies products to over 40 countries across both developed and emerging markets, which accounted for 33 percent of its revenue from operations in FY21.
The plastic labware market in India is estimated to expand at a compound annual growth rate of 16 percent to about Rs 2,575.5 crore by 2025 and the global plastic laboratory products market is expected to expand at a CAGR of 10.5 percent to $13.8 billion by 2025.
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