Life sciences company Tarsons Products shares extended gains sharply to hit an upper circuit of 20 percent, though the listing gains missed analysts’ expectations due to a steep fall in the equity market, on November 26.
The rally indicates that the appetite for the stock is huge and that was seen when the offer was subscribed 77.49 times between November 15 and 17.
Experts largely advised holding Tarsons Products for the long term. “It is a leading Indian supplier to the life sciences sector with a strong brand recognition, quality products, and available at reasonable valuation on an absolute basis,” said Likhita Chepa, Senior Research Analyst at CapitalVia Global Research.
The stock opened with 5.7 percent gains at Rs 700 on the BSE, much lower than analysts’ expectations (25-30 percent) and grey market premium (over 25 percent). But it extended gains gradually and froze finally at 20 percent gains in the afternoon at Rs 840, posting 26.89 percent gains over issue price of Rs 662 per share.
Prashanth Tapse, Vice President (Research) at Mehta Equities also advised allotted investors to hold on to the stock, considering long-term play as the market always rewards a player who has the high growth potential.
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“We believe Tarsons Products is well placed to tap the sectoral growth with a diverse range of labware products growing faster than the healthcare space, providing bright business prospects,” Tapse said.
Tarson Products is engaged in designing, developing, manufacturing and supplying a diverse range of labware products used in laboratories across research organisations, academic institutes, pharmaceutical firms, diagnostics companies and hospitals. Its product portfolio includes over 1,700 SKUs (stock-keeping units) across 300 products as of June 2021.
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The company’s authorised distributors supply products to customers such as the Indian Institute of Chemical Technology, National Centre for Biological Sciences, Dr Reddy’s Laboratories, Enzene Biosciences, Syngene International, Veeda Clinical Research, Molbio Diagnostics, Agappe Diagnostic, Metropolis Healthcare, Dr Lal Path Labs and Mylab Life Solutions.
Astha Jain, Senior Research Analyst at Hem Securities, recommended booking partial profits on the listing day and hold the partial allotment for a long-term purpose as the company, as a supplier to the life sciences sector, has a range of labware products across varied customer segments and is operating in an industry which has an addressable market.
“The company is well-equipped and has automated manufacturing facilities with geographic reach through strong sales and distribution network, has an experienced promoter backed by a strong management team,” she said.
The labware products maker has mopped up Rs 1,023.47 crore through its public issue that consisted of fresh issue of Rs 149.63 crore, and an offer-for-sale of Rs 873.84 crore by promoters and investor.
The proceeds from the fresh issue will be used in paying debt, and funding a part of the capital expenditure for a new manufacturing facility at Panchla in West Bengal.
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