Tarsons Products Limited

Tarsons Products reported a consolidated revenue of INR 91 crores for Q1 FY26, marking an 8% year-on-year growth. Standalone revenue also grew by 10% YoY to INR 71 crores. The company's standalone EBITDA for the quarter stood at INR 22 crores, a 31% increase YoY, with the EBITDA margin improving to 31.2% from 26.3% in Q1 FY25. However, consolidated PAT declined to INR 1.8 crores from INR 4 crores in Q1 FY25, primarily due to higher depreciation expenses of INR 17.8 crores following the capitalization of the Panchla facility.

The company's capital expenditure program is nearing completion, with Phase 1 of commercial production at the new Panchla facility already operational. Initial revenue contribution from new cell culture products is expected to begin in Q4 FY26, with a full-scale ramp-up anticipated over the next two financial years. Management expects the Panchla facility to reach an optimum utilization level of 70-75% within three years of complete commercialization, likely by FY29. The new facilities are projected to contribute 55-60% of revenue from overseas markets and 40% from the domestic market.

The overseas market experienced a relatively soft quarter, with standalone export revenue growing 5% YoY and consolidated export revenue at INR 43 crores. Nerbe, the Germany-based entity acquired in FY24, reported flat revenue growth for the period, attributed to budget constraints and global uncertainty^🌐 in Europe. Tarsons aims to achieve approximately EUR 5 million in inter-transfer revenue through Nerbe over time^⏳, as it integrates Tarsons manufactured products into Nerbe's distribution channels. The company expects Nerbe's EBITDA margins to reach early double digits in the future.

The domestic business showed positive signs of recovery, delivering a 12% YoY growth in Q1 FY26, with revenue reaching INR 48 crores. Despite these green shoots, the domestic market remains highly competitive due to sluggish market conditions and underutilized capacities across various players. This intense competition has prevented the company from implementing price increases, as the market currently lacks the appetite to absorb them. Management noted that the momentum seen in new orders has slowed recently due to global uncertainties, particularly concerning US tariffs.

For FY26, the company anticipates depreciation to be around INR 80-85 crores. Management projects yearly EBITDA margins to be in the range of 33-35%, with a potential to inch towards 40% once the new facilities are fully stabilized and contributing to revenue. A significant portion of retained earnings will be used to pare down debt. The company remains optimistic about long-term growth, leveraging its expanded capacities and product portfolio, but acknowledges near-term headwind^📎s from global economic conditions and trade policies.