Tarsons Products IPO, trades at 25% premium in grey market
Labware products maker Tarsons Products will make its stock market debut on November 26 and if the grey market is anything to go by, it will be an impressive listing.
On November 24, the share was trading at Rs 822-832 in the grey market, a premium of Rs 160-170, or 24-26 percent, over the final issue price of Rs 662, as per the IPO Watch and IPO Central.
The grey market is an unofficial platform where trading in shares begins with the announcement of IPO price band and continues till the listing of shares on the bourses.
“The company is going to list at a P/E (price-to-earnings) of 40.61 with a market cap of Rs 3,522 crore. The company has robust financials and strong ratios. After the IPO, the company would become free of debt which is a good signal,” said Sonam Srivastava, Founder of Wright Research.
The stock will debut on the BSE and NSE on November 26, 2021 in what would be the 52nd listing of the year 2021.
The grey market premium and healthy subscription seem to be backed by the robust financials, aim to reduce debts with IPO money, and the company’s strong experience in labware product making, experts said.
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The public issue of the life sciences company was subscribed 77.79 times during November 15-17, 2021. Non-institutional investors bought 184.58 times the portion set aside for them, and the reserved part of qualified institutional investors was booked 115.77 times. Retail investors put in bids 10.56 times their reserved portion.
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Srivastava said the life-sciences industry was growing rapidly because of advancements in scientific research, even though the recent growth in numbers of Tarson’s could be attributed to the Covid-19 pandemic and may not be sustainable.
“As the grey market premium suggests, this is an attractive company available at a reasonable valuation and can attract a 30 percent listing premium. The prospects for Tarsons will be linked to the pharma industry, though, which is going through a slowdown,” she said.
Tarsons Products is a leading Indian life sciences company with more than three decades of experience in producing and supplying labware products.
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The company mopped up Rs 1,023.47 crore from public issue, including fresh issuance of shares worth Rs 149.63 crore.
The net proceeds from fresh issue will be used for repaying of borrowings (Rs 78.54 crore) and the capital expenditure for a new manufacturing facility at Panchla, West Bengal (Rs 62 crore).
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