scorecardresearchTarsons Products: Diversified portfolio & strong distribution network to facilitate its growth across geographies
Tarsons caters to the branded as well as ODM export market. The company distributes branded products to more than 40 countries through a network of 45 active distributors.

Tarsons Products: Diversified portfolio & strong distribution network to facilitate its growth across geographies

Updated: 12 Jan 2023, 12:23 PM IST
TL;DR.
Tarsons Products Ltd is a leading plastic lab ware company in India with 25% share in its target market, and has a well-diversified product portfolio with 1,700+ SKUs across 300 products. It has immense export potential and is currently exporting to 40+ countries via 45+ distributors.

The global plastic labware market has an opportunity size of USD 8.2–8.4 bn ( 61, 500–63,000 cr) which provides a huge export potential for Indian players. In 2009, Tarsons started supplying plastic labware to Avantor, this enabled Tarsons to expand business to new geographies.

Tarsons caters to the branded as well as ODM export market. The company distributes branded products to more than 40 countries through a network of 45 active distributors.

Domestic plastic labware market is expected to grow at a healthy rate of 16% and players with quality products, wide distribution reliability and competitive pricing to outperform the sector.

The domestic market size of the addressable plastic labware industry is 1200 cr. Tarsons accounts for 720–740 cr of the market. Tarsons plans to expand its product portfolio by manufacturing PCR and cell culture products where the company has minimal presence; the space is dominated by MNC players such as Thermo Fisher and Corning. 

Tarsons aims to double its capacity through the upcoming plant at Panchla which would enable it to cater to the entire 1200 cr plastic labware market.

Rapid shift from glassware to plasticware in India

Rapid shift from glassware to plasticware in India
Rapid shift from glassware to plasticware in India

Increased Applicability: Superior ability to handle radioactive isotopes, hazardous & carcinogenic chemicals or substances.

Enhanced Safety: Inherent characteristics of plasticware including thermo-stability & safety of laboratory personnel in case of accidents.

Less Contamination: Samples stored in glass containers are prone to contamination due to leaching of inorganic ions into aqueous solutions or exposure to light in case of light-sensitive materials; thus, making plasticware a preferred choice vis-a-vis glassware.

Ease of Handling: Plastic Labware is significantly lighter in weight and much easier to handle over long hours than glassware.

Durability: Plastic equipment is unbreakable & has a longer shelf life as well allowing for better use & flexibility to scientists & researchers.

Company overview

Tarsons Products Ltd incorporated in 1983, is one of the leading plastic labware companies in India with 25% share in its target market. Company is engaged in the designing, development, manufacturing, and marketing of 'consumables', 'reusable' and 'others' including bench top equipment.

Company is currently has a network of 141 distributors and 50 members in the sales team. Out of the total distributors, 75–80% have been associated with Tarsons for more than two decades. Co. caters to various laboratories across research organisations, academia institutes, pharmaceutical companies, contract research organizations, diagnostic companies, and hospitals.

The company has a well-diversified product portfolio with 1,700+ SKUs across 300 products. Tarsons runs the largest in-house plastic labware manufacturing facilities in India which enables it to have full control on product quality and deliver products in time, besides providing cost advantage.

Geographically, Tarsons manufacturing facilities are concentrated – all are located in West Bengal. Two of the manufacturing units, located in Dhulagarh and Jangalpur, contributed 87% of total manufacturing revenue in FY22. The company uses a variety of raw materials including polystyrene, PP, HDPE, LDPE and other specialised medical grade plastic resins to manufacture products.

Key players in plasticware segment
Key players in plasticware segment

Huge export opportunity market

• Demand for plasticware is expected to grow at 10% CAGR for developing markets like APAC & MEA, developed markets like Americas & Europe also expected to grow healthy.

• Rapid increase in demand for plasticware is providing a platform for Indian players to expand share of export revenues while continuing import substitution at home.

• Domestic companies in India can take advantage of their competitive pricing to capture a larger share of the global market.

• Established Indian players can further expand export market share on the back of high-quality & reliable products with enhanced R&D and independent design & customization capabilities.

• Factors such as supplier reliability, cultivating new relationships, deepening existing relationships, and meeting demands in a timely manner will enhance the export market share.

Catering to different industries

Catering to different industries
Catering to different industries

One of the very few players to have a global reach

As of 31st March 2022, the company sold its products to 40+ countries via 45+ distributors. Export operations are a blend of branded and ODM sales. Under the ODM model, the product is independently designed & developed by the company as per the requirements given & then sold to the respective brand owners.

Tarson has recorded revenue growth of more than 30% over the last few years, outperforming the industry estimates in the last few years. Company has generated the highest ever revenue of 301 cr for the FY ended 2022.

Op margin for the Fy 22 stood at 51% and continuously improving from 39% in FY 20. Tarson is foraying into PCR and cell culture products, which is expected to generate margins in line with those of the company’s existing products. Tarson is witnessing strong demand from pharmaceutical companies and the Indian Plasticware market is expected to rise @16.7% CAGR over next 3 years.

Company has planned total Capex of 500 cr, out of which 240 cr has already incurred, Revenue from the same will be reflected in the financials of next few years.

The company is currently having ROE of 27.4%, ROCE of 35.3%. It is net debt free. It's 3 year sales CAGR stood at 19%. and 3 year profit CAGR stood at 37%. It will be a good time to research about the company and do the homework.

Shuchi Nahar is a Certified Research Analyst. She can be found on Twitter at @shuchi_nahar

Note: This article is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related investment-related decision.

Picking the right stocks is the most important part of becoming a successful investor
Picking the right stocks is the most important part of becoming a successful investor
First Published: 12 Jan 2023, 12:23 PM IST