Tarsons Products IPO subscribed 3.58 times on day 2
Premium- As of 5pm, the IPO received applications for 38.80 million shares against 10.84 million shares, stock exchange data showed
The initial public offering of Tarsons Products Ltd (TPL), excluding the anchor book, was subscribed 3.58 times on Tuesday, the second of the three-day offering.
As of 5pm, the IPO received applications for 38.80 million shares against 10.84 million shares, stock exchange data showed. The institutional investor category was subscribed 1.30 times while the non institutional category comprising high net worth individuals was subscribed 398% or 3.98 times.
Retail investors, whose investments cannot exceed ₹2 lakh per individual, subscribed to 4.74 times of the 5.39 million shares on offer, data showed.
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.
The 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.
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 believe TPL can potentially sustain a healthy growth in the subsequent years.
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