Reduce Tarsons Products: target of Rs 408: ICICI Securities

About this update from Tarsons Products Limited

ICICI Securities's research report on Tarsons ProductsTarson’s Q1FY25 standalone biz revenue and margins were impacted due to a slowdown in its domestic business (down ~4% YoY). Higher share of exports and sales of Nerbe's (INR 201mn) weighed on its consol. EBITDA margins, down 1280bps YoY to 25.7%. Commercialisation of Panchla plant is now expected in H2FY25, as it suffered from damage to new machinery (INR 30mn impact) in Q1. It has incurred capex of INR 3bn towards the Panchla plant and can generate revenues of INR 4bn at peak capacity in 3–5 years post commercialisation. We cut our FY25E/FY26E EPS by 12%/10.8%, factoring in lower sales and margins of Nerbe (8–12%). We lower our rating to REDUCE (Add earlier). TP revised to INR 408 at 17x FY26E EV/EBITDA.OutlookThe stock currently trades at valuations of 41.1x FY25E and 36.2x FY26E earnings and EV/EBITDA multiple of 21.6x FY25E and 18.5x FY26E. We lower our rating to REDUCE (from Add) and our target price to INR 408 (earlier INR 445) at 17x FY26E EV/EBITDA (unchanged).For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Tarsons Products_22082024_ICICI Securities

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