Tarsons Products
About the company:
Tarsons Products is a leader in India in the production and supply of laboratory plastic for use within molecular biology, cell culture, genomics, proteomics and immunology. The company specializes in Disposable plastic lab ware, Liquid handling systems, Cryo lab ware and Centrifuge ware.
Details of the issue:
The company has launched its IPO today and it is going to close on 17th November.
The initial share sale is made up of fresh issue of equity shares worth Rs. 150 crore and an offer-for-sale of 1.32 crore shares. It is coming at an attractive pricing of Rs.635-662 per share for Rs.1024 crore initial share sale. Bidding can be done for a minimum of 22 shares and in multiples thereof.
Objectives
To fund part of the capital expenditure for the newly opened manufacturing unit at Panchla (West Bengal) and general corporate purposes. It is raising funds also to repay or prepay fully or partially, borrowings of up to Rs.78.54 crore.
Positivity prevails for the current issue considering probable long-term gains. The company has a strong brand recognition quality product. It is going to list at a P/E of 40.61 with a market cap of Rs. 3522.3 crore. The financials of the last three years show revenue growth of over 21%. It generated a standalone revenue of Rs.184.7 crore for FY19 against consolidated revenue of Rs.234.2 crore for FY21.
After the IPO the company shall become debt-free. The lab ware industry is growing and being a key industry supplier, the company has a potential to grow its business backed by its results. Tarsons Products has a diversified portfolio with over 1700 SKUs across 300 products. Pandemic has added to its profitability due to its range of lab ware and has a promising opportunity both in the import and export markets. It had 12% share in laboratory consumables in 2020. The company’s business and scale of operations are such that it cannot be compared with any other listed company in the same category.
The IPO carries a ‘subscribe’ flag and can be considered for investment while it is open for subscription.
Go Fashion
About the company:
Popularly known as ‘Go Colors’ is a Tamil Nadu based cotton fabric legwear products company. It’s known for women’s bottom wear apparel like legging, Cropped legging, Girls Harem Knit, Kurti pants, Churidar, Legging cropped and Patiala. The company was incorporated on 09 September 2010. Its market share is 8% in the branded women’s bottom-wear market in FY20. It is one of the few apparel companies in India to have created a brand name in women’s bottom-wear and the first company exclusively dedicated to this kind of apparels in this category.
Details of the issue:
The IPO shall be open for subscription on November 17 and close on November 22. It consists of a fresh issue of Rs. 125 crore and an offer for sale by promoters and investors of approx. Rs.888.61 crore, having a face value of Rs.10 each. Promoter and Promoter groups hold 57.47 per cent shareholding in the company, and the rest is held by the investors.
Objective: The net proceeds shall be used to fund roll out of 120 new exclusive brand outlets amounting to Rs.33.73 crores and working capital requirements of Rs.61.40 crore. The company has fixed a price band of Rs. 655-Rs.690 per share. The minimum application is to be made for 21 shares and in multiples thereof. It is planning to increase its outlets from the current 450+ to over 2000+ in the next five-six years. Post allotment, shares will be listed on BSE and NSE. Allocation has been made for QIBS-75%, HNIs-15% and Retail Investors-10%.
Organized share of women’s bottom-wear market is expected to reach a market share of 38% in fiscal year 2025 growing at a CAGR of 24.3% until 2025.
The company’s operating revenue range is INR 100 cr-500cr for the financial year ending on 31st March,2021. For the last three fiscal years, the company has an average EPS of Rs.4.01 and an average RoNW of 7.76%. The company has incurred losses for the last 15 months; hence the P/E ratio cannot be ascertained. Those who are risk averse may skip investing in this IPO. Cash surplus and risk takers may consider it for long term investment purposes. Operation on an outsourcing basis turns risky as it increases dependence on third party deals.
The company though is not in a profitable position, it can be concluded that it has a sustainable future looking to the products that cater to women across all age groups and physiques, the products are also not affected by seasons or fashion trends either. Though it has not paid any dividends on the equity shares so far, it has paid 0.01% dividends on preference shares from FY19-FY22 till the filing of this offer RHP.
The companies shown as its listed peers in the offer documents however have a better P/E ratio. The losses it suffered are mainly during the pandemic year and the losses prolonged till now as for first quarter of FY22 ended on June 30, 2021. It had a turnover of Rs. 40.29 crore and incurred a loss of Rs. 19 crores during this quarter. FY21 turnover/net profits(loss) of Rs. 282.25 crores/Rs. -(3.54) crore.
Bhoi Smrutirekha Dharanidhar