why this labware firm’s IPO is intriguing
amidst the Coronavirus outbreak, the demand for lab equipment hit its peak. hospitals and testing laboratories rushed to buy PPE kits, storage vials, and biohazard boxes. this surge in orders meant expansion of production capacity for West Bengal-based plastic labware maker Tarsons Products.
to fund this, the company is taking the stock market route to access capital. its initial public offering (IPO) was fully subscribed on November 15, which is the first day of opening. tarsons is looking to raise Rs 1,024 crore through the IPO, which will be used to set up a manufacturing plant in Panchla, West Bengal.
set up in 1983, Tarsons has been a major player in the domestic plastic labware space for over three decades. it holds 12% share in India where global players such as Eppendorf and Thermo Fisher Scientific dominate this Rs 1,225 crore market.
the company is also on a steady path to global expansion. it is now planning to manufacture polymerase chain reaction (PCR) products and cell culture products. it will be the first Indian company to foray into this Rs 24,000 space.
PCR involves using equipment to make copies of the genetic material or DNA. this is a technique used by molecular biologists.
Tarsons Products’ portfolio is classified into three categories — consumables, reusables, and others. this also includes benchtop instrumentation for labs and hospitals.
brokerages have given a positive review of the issue, though investors have been asked to stay cautioned about rising competition from China.
Vikas Jain, Senior Research Analyst at Reliance Securities, said that the IPO is reasonably priced. he also added that considering the rise in demand for health products post Covid, the company can sustain this growth.
Tarsons is in a unique space in India because there aren’t other listed entities in this segment. even globally, this is a niche market that the pharmaceutical industry depends on.
amidst the economic slowdown due to Covid globally, it was only the pharma and allied sectors that held strong. Having the first-mover advantage, Tarsons Products has a wider room to grow.