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ICICI Securities Report
The acquisition of Nerbe's (Germany) low-margin business and a slowing in the life sciences industry impacted Tarsons Products Ltd.'s Q4 FY24 performance; its numbers fell short of our expectations too.
Tarson's standalone business fared better – exports grew faster, at ~12% YoY in Q4 FY24, and domestic sales were up ~2% YoY. Panchla plant is expected to commence operations in Q2 FY25 while the cell culture unit will be operational in Q4 FY25. The Panchla plant can generate revenues of Rs 4 billion at peak capacity in three–five years post commercialisation.
We cut FY25E/26E earnings per share by 20%/29%, factoring in lower sales and margins of Nerbe (CY23 revenue/Ebitda of €8 million/ €0.2 million). We lower our rating to Add (Buy earlier). Target price revised to Rs 445 at 17 times FY26E enterprise value/Ebitda (from Rs 625 at 17 times FY26E EV/Ebitda).
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