TARSONS products ltd

If that is the case, then the subsidiary should have some revenue as the entity in India would sell to subsidiary in Singapore which would in turn sell to the customers. The annual report doesn’t disclose any revenue when discussing this subsidiary.

Disclosure : tracking, not invested

1 Like

Notes from last concall:

  • Export is 38% of total revenue
  • We have given a INR 500 crore of capex previously. Out of that till now, we have already incurred about to be INR 300 crores. And in the next 15 to 18 months, we are going to incur the remaining.
  • Revenue degrowth(-8%) this quarter/year due to high covid related demand last year leading to higher base.
  • 60-odd crores of our revenue in FY '22 came from COVID-related business, which was between 17% to 20% of our revenues.
  • 7% price hike taken this year in domestic segment
  • 2/3rd of the revenue ties to diagnostic
  • We expect Panchla to be up in billing exports revenue in the next 3.5 months, four months and scaling up to full capacity, to what we have planned by around Q2 of FY '24 , and Amta would be around, in and around the same time as well. But Amta has more on storage and radiation and less on production. So our main focus is on Panchla, which has more on output and revenue.
  • Have around 25% market share in their product segment.

The results are down for 2 back to back quarters. Quarter ending Sept its net sales are down by 6% and in the current result it increased to 13%. Anyone tracking this business? Any guidance will be helpful.


Below are the points I could grasp from going through concall:

  1. Whole Pharma industry is going through slowdown, lot of competition in diagnostic industry resulted in some competition to tarson products.
  2. Maintained guidance of 500 crore revenue in 2025.
    As per them this slowdown phase is temporary but not in position to give any short or mid term guidance.
  3. Last 2 quarters have zero covid related revenue while last year has 15-17% covid related revenue.
  4. Promoting their products internationally through exibition gain 3-4 distributors.

I guess last year Q4 was bumper and had covid related revenues so next quarter would also be sluggish after that we could be having base set for whole year and then can get fair bit of idea.


Haven’t gone through the concall, but lot of competition in diagnostic industry should benefit them, as the new entrants and aggressive growers will need more consumables. How come that adds competition to them! Are the new players in the diagnostic industry buying consumables at a cheaper rate from their competitors?


Yes they are buying cheaper from competitors. Tarson didn’t cut prices at the moment and as per them they haven’t lost any market share and this quarter they have done better than their competitors.
They are tracking this and will come up with different strategy if any significant impact being seen.


Snippet from concall


Thanks Chaitanya that was very insightful

1 Like

Tarsons products detailed analysis

Hope these will helpful to you


Before penning my thoughts on further interactions , I wanted to speak to the supply chain partner. Finally spoke to him over this weekend. I also spoke to the competitor of Tarsons (prior to Q3 results). I wanted to understand how is the space shaping up, concerns around macros etc.

Interaction with the competitor.

Their Q1 and Q2 were optically weak due to high base last 2 quarters but overall non covid is growing at 20-25% for us.

Over-capacities happened due to Covid and opportunistic manufacturers got in masks santizers and some products of our industry. Because demand was ot peak, everybody made money. When market went down, capacities there they went desperate to sell and it spoiled the market.

I do expect next 4 quarters crappy stuff goes out of the supply chain.

Tarsons had covid in the base more than us. Hence they went into PCR/Cell Culture since demand from diagnostics reduced since they also stocked during covid.

Q1, Q2, Q3 : If anyone had a flat line one should be happy. Growth of 10% is thrilled and even 10% de-growth, one should be happy.

Glass to plastic is a pretty old narrative, the transformation of users from glass to plastic, wherever its possible 95% is done.

Tarsons growth triggers : keep a track of diversification. They are too dependent on India, has own advantage and disadvantage. Capture more opportunities across and outside. Product range ; it has dependance on few SKUs although has wide SKUs.

20-25% growrh rate possible for us and tarsons.

1700 skus is true for tarsons. We have 1100 skus.

We have late 30% margins Tarsons can sustain these margins or upper 40%s

Abdos as a competitor : There is no competition from it, lot of white noise.

They have the firepower no doubt. They have seen their sales fall a lot post covid. Shows the impact of covid had on industry (from 100 to 35 crores)

Customers prefer companies which can offer SKUs.

Chinese competition is very relevant

China plus 1 is relevant even for us.

Sales and marketing costs : What we do is go to international road shows. Reiterate our brand image. We keep participating and business starts coming in and difficult to correlate which exhibitions get business.

Going forward these costs not play big role as we scale.

Few listed global peers, have also seen slowdown FY numbers have been published, one can see their slowdown exceeds our slowdown.

Lot of distributors have inventory levels which they cant sell.

Overall industry is not looking great but rebound is around the corner. We are doing amongst the best performance india vs international, small than us and Larger than us.

Approximately 30,000 crores is our target market globally (including our new products).

India market is 1200 crores.

We have added few distribution accounts globally. We change distribution if products not doing well.

Interaction with the supply chain partner :

This March should be flattish to slight +ve YoY distributors will meet their year end targets. Then off take in April will be low, since over stuff in March, unless demand significantly recovers in coming quarters.

Overall confident on the industry.

20% growth achievable YoY for the distributors.

Covid base was so high, if they close flat is achievement.

They might have lost some share in diagnostics (he was not sure, hence can ignore)

Tarsons PETG replacing Nalgene.

24lacs months PETG sales in Reliance life science. Half sale converted to tarsons.

Process : Sampling > quality > Approve> Pricing lower.

12lac month (1.4 crore) Reliance Lifesciencies.

3-5% Price rise.

How will distributors achieve 20% growth. FY24 : FY23 sales +5%(Price)+5-7%(New products)+ 10% organic growth. = 20% growth.

New products need to work anyhow for tarsons to achieve their guidance.

1-2 PETG and Pasture Pippet (own manufacture, better margin earlier imported.

PCR didn’t pick up in few regions and it is doing well in north.

Sales team hired new folks to push PCR line, door to door.

They are also Heavily investing in instruments, which are imported, study and then launch.

Brazil, Argentine, Latin America, Russian : hit them hard in exports.

Disc : Exited with a 6% loss, believe they could push their guidance in coming quarters and this could derail the FV to 450(as per my model). Just my thoughts could be wrong on the exit decision. Using the recent correction to invest in other names where earnings visibility is more clear.


in line with the above note, flattish YoY


if we compare q4 fy23 vs q4 fy 22, revenue remained flat. q4 fy22, also seems not having covid related revenue, moreover EBIDTA margin also came down. How do you see the result?

Management usually guides for 45% as sustainable.
Also over the past year, costs have increased but sales have gone down, -ve operating leverage.

Results overall in line with what i shared in my above note.

I believe even management said, 500 crores guidance they will review at the end of FY24, on earlier calls rohan used to sound confident and now there has been complete change in his commentary.


CO has been utterly disappointed with the results, as the industry, which is on an upward trajectory, had slight expectations that CO would give some better results. but this has not happened, and with an almost 1000 bps decline in margin, we would definitely see the pressure from the market. I doubt the industry is shaping up and not allowing companies to improve margins. I only hope that the launch of the Panchala facility is a trigger, and I’m not sure how this is materializing now.


The company has ran into problems in construction and commissioning of the Panchala plant. Everything has been delayed by 6 months and the commissioning of the plant will be done at the beginning of Q4FY24, per the released details. Would have appreciated if they had elaborated the ‘unforseen’ circumstances due to which the construction and commissioning has been delayed.
Per technical analysis, the stock is in stage 4 decline. My perception is that it will take a long time to come back in stage 2 growth period, which, prima facie should come on the backs of increased topline and better margins from Panchla plant.



  • EBITDA MARGIN- Due to the lower absorption of fixed expenses due to decline in revenues affecting margins & one off 2.8 cr for failed acquisition.
  • Our sales have de-grown, but we have not lost any of the customers.
  • Life science sector is experiencing a slowdown leading to a notable reduction in demand for plastic laboratory-ware products, both in the international and domestic market. demand in the first quarter has been relatively lower for the consumables segment.
  • REVENUE - Factor to the decline in the revenue is the high level of inventory, which is there in the distribution channel. An issue is that there are these huge inventory levels at the customer end as well compared to the distributor end.
  • ACQUISITION- our strategy involves an inorganic opportunity that fosters the strengthening of our channel and distribution partnerships.
  • PANCHLA - Panchla is introducing cell culture and increasing capacity in existing products. We anticipate that the first round of production will begin in Q3 FY '24.
  • The pressure in the Asian subcontinent is much higher than the European and American subcontinent.
  • OVER CAPACITY - I think it’s not only China, but globally that there has been a lot of capacity.
  • Cell culture is still primarily dominated by Europe and the U.S.
  • Q4 is a very strong year in India because people look to complete their budgets in purchases. Distributors look to complete their targets. Sales people look to complete their target.
  • CAPEX UPDATE- out of the total capex, we already incurred about INR 430 crores. INR 525 crores, INR 530 crores will be total capex.
  • We expect cell culture business to – at full capacity should peak out closer to the INR 100 crores of revenue.
  • our purchase prices of raw material continue to increase as the euro has gone up and the dollar has gone up.
  • Asset-turnover ratio on the gross blocks would be in the range of 0.65 to 0.7.
  • BUSINESS UPDATE- We started receiving orders from the customers for PEG bottles & we have started revenues in small numbers for the serological pipettes from our pilot production, batch production.

AMTA PLANT- don’t expect cost savings, but we expect operational efficiencies because we need a bigger place to be able to tackle revenues, which are significantly higher than INR 300 crores. 5% to 10% would be the Gamma plant and another 10% would be manufacturing.


Is it good time to add at this level of 509? what are the chances of recovery in longer term? Any thoughts Guidance?

Important levers to see an uptick in price is the following two units commercial operations kick in;

in the short term it may impact the ROCE & the EBIT Margins, but in the mid term it would factor as the utilisation keep ramp up.

According to my thesis stock is available at the reasonable price for new entrants!


RESULT Q2FY24 Concall

  • EBITDA margin for Q2FY24 stood at 38.3%. This was impacted on account of lower revenue growth and GP margin leading to a negative operating leverage rate, increase in the cost on account of manpower and marketing expenses, which we believe are investments to fuel future growth opportunities
  • Commercial production of cell culture and other products is anticipated to start in Q1FY25.
  • Radiation & Isotope Technology for this purpose. This strategic move aims to reduce our dependence on a single source in West Bengal.
  • Revenue breakup- export sales contributed around 35% and domestic sales contributed around 65%.
  • BIS certification issue- raw material supply is getting a lot of problems because of the implementation of one of the concepts called BIS. And the government, obviously, is not allowing all kinds of imports without having that kind of certification.
  • Ramp up of new capex- we expect to scale up in 4 to 5 years, completely ramp up to 100% of available capacities.
  • Asset turn- 0.7x on 550 cr capex = 350-400cr revenue potential.
  • Revenue potential- the existing capacity and the upcoming capacity, we can touch a revenue of about INR700 crores to INR800 crores.
  • There would still be a lot of space for future capex.
  • 500cr guidance- INR500 crores in FY '25 looks highly unlikely at this point of time. no new guidance now.
  • ESG issue- in some countries, the government banned or limited the usage of plastic because it’s not ESG friendly.
  • GST notice- 66lakh
  • Inorganic acquisition, which we are looking for in Europe and U.S. kind of countries.
  • I dont see anything good happening in the next few quarters, operating deleverage is going to play, so I am exiting with 14% loss.

what is the logic of doing capex of 550 cr having asset turnover of 0.7

1 Like