Go Colors, Tarsons on this week’s IPO menu; should you buy them?
Go Colors and Tarsons have a solid presence in offline businesses, which may appeal to more traditional investors
After finishing a rather busy schedule last week — that saw Nykaa list at record gains, and Paytm scrape through with what’s billed as India’s largest-ever IPO — the markets are all set for this week’s IPO entries. On the menu are Go Fashion (India) Ltd, which runs women’s wear brand Go Colors, and Tarsons Products, which manufactures laboratory products.
While neither IPO has gotten the kind of eyeballs that e-commerce stars such as Zomato, Nykaa and Paytm did, it must be remembered that the two companies have done well in their traditional turfs. Both run solid brick-and-model businesses that some investors swear by.
Here’s a look at their initial public offering (IPO) details and financial fundamentals.
Go Colours: Rainbow of opportunities
Go Colors, whose ₹800-crore IPO starts on November 17 and ends on November 22, has set a price band of ₹655-690 per share. The offer includes a fresh issue of equity shares worth ₹125 crore, and an offer-for-sale (OFS) by promoters and existing investors of around 1.3 crore shares. Among the stakeholders in the firm are institutional investors such as Sequoia Capital India and ICICI Venture.
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The company develops, design and retails women’s bottom-wear products — such as salwars, churidars, palazzos, pants, leggings and jeggings — that it sells both via its exclusive outlets and through other clothes retailers. It will use the IPO proceeds to open 120 new own-brand outlets, support working capital needs and for general corporate purposes.
While the women’s readymade apparel industry is certainly crowded, Go Colors has established itself well in the niche segment of bottom-wear. It’s among the pioneers in the category, and a significant player, too, with an estimated market share of 8% in 2020.
Its product range comes in a variety of colours and sizes, and cuts across segments such as ethnic wear, western wear, fusion wear, athleisure and denims. While there is always the threat of competition, Go Colors operates in a lucrative segment with vast opportunities, both offline and online.
Tarsons Products: Tried & tested formula
Labware maker Tarsons Products’ ₹1,024-crore maiden offer opens for subscription on November 15, and closes on November 17. The Kolkata-based company has set an IPO price band of ₹635-662 a share. The fresh equity portion accounts for ₹150 crore, while the OFS size is ₹874 crore. Ahead of the IPO, the company raised ₹306 crore from anchor investors last Friday.
Tarsons will use the issue proceeds to repay debt and part-fund its new manufacturing facility at Panchla in West Bengal, apart from general corporate purposes.
The company designs, makes and markets a wide range of labware products, with five manufacturing facilities in West Bengal. It caters to laboratories owned by research organisations, academic institutions, hospitals and pharmaceutical and diagnostics companies.
Amid high-profile IPOs by internet companies, Tarsons’ offer may appeal to more conservative investors. The company has physical assets and operates in a traditional market.
Marwadi Financial Services has assigned a ‘subscribe’ rating to the IPO. “Considering the TTM (trailing 12 months up to June 2021) adjusted EPS (earnings per share) of ₹16.3 on post issue basis, the company is going to list at a P/E (price-earnings ratio) of 40.61 with a market cap of ₹3,522 crore,” it wrote in a note.
