Tarsons Products Limited — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

Tarsons Products reported a strong Q3 FY26 with consolidated revenue growing 12.8% YoY to INR 108 crores and adjusted cash PAT increasing 38.6% YoY to INR 31.4 crores. The company is commercializing its new Panchla facility, with bioprocess products already selling, and anticipates stronger revenue growth from FY27 onwards. Despite facing aggressive pricing in the domestic market and international trade uncertainties, Tarsons expects to benefit from new FTAs and government focus on biopharma.

Highlights

  • Consolidated revenue grew 12.8% YoY in Q3 FY26 to INR 108 crores.

  • Consolidated adjusted cash PAT grew 38.6% YoY in Q3 FY26 to INR 31.4 crores.

  • New bioprocess products from the Panchla facility have been commissioned and are selling in India and internationally.

  • Company is well-positioned to benefit from India-EU and India-US FTAs, especially the US FTA which could significantly boost business.

  • Strong focus on biopharma sector by Union Government with INR 100 billion allocation over 5 years, driving demand for lab consumables.

Concerns

  • Domestic market experiencing aggressive pricing strategies from competitors, keeping pricing under pressure.

  • Heightened uncertainty in international trade due to geopolitical tensions and tariff-related disruptions.

  • Slower than projected capacity utilization for new capacities due to increased market competition post-COVID.

  • Decline in profitability primarily due to higher depreciation expenses (INR 60.6 crores vs INR 36.35 crores) from partial capitalization of Panchla facility.

Key financials

  1. Consolidated Revenue ₹108 Cr +12.8%YoY
  2. Consolidated EBITDA ₹31.5 Cr
  3. Consolidated EBITDA Margin 29.2%
  4. Consolidated Adjusted PAT ₹6.4 Cr +21.4%YoY
  5. Consolidated Adjusted Cash PAT ₹31.4 Cr +38.6%YoY

What they filed

Q1 FY27: revenue up 20.7%, net profit down 180.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue99 96 113 91 102 +3%108 +13%121 +7%110 +21%
EBITDA25 30 37 25 27 +8%32 +6%34 −7%26 +5%
Net profit10 5 10 2 3 −68%5 −4%4 −59%-1 −181%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • New products (bioprocess containers, cell culture) and land/building ₹420 Cr
    • Capacity expansion ₹180 Cr
    • Sterilization plant (part of Panchla facility)
    We had made the announcement of this INR600 crores capex in '21-'22, we are commercializing the same in '26 now. So, the bioprocess side, which is certain kind of containers and bottles, has been commissioned... 70% of our capex was used to build newer products or in land and building. And only about 25%, 30% of our capex was built in expanding capacity. So, I think there was a lot of expanded capacity, and then people have large fixed cost burden. And we felt that, that is a very large risk moving forward as most of our products are going to be sterilized. And hence, we wanted to reduce that risk and be self-reliant, rather than wondering and getting stuck after putting in INR 500 crores, INR 600 crores of capex by not having enough sterilization or not having enough certified sterilization.
  • Debt Debt disclosed
    This investment of equity in Singapore is basically related to the loan which we have taken in Singapore entity for the acquisition of German entity. We need to serve the EMI obligations and the loan obligation from India.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 and beyond · Low confidence stronger revenue growth
    we are optimistic about delivering stronger revenue growth in FY '27 and beyond.

    — Aryan Sehgal

Capacity

  • New Product Capacity Utilization Capacity · over the next 2 to 3 years · Medium confidence close to optimal levels
    then the scale-up will happen over 2 to 3 years where we expect to reach close to optimal levels of capacity.

    — Aryan Sehgal

  • New Product Capacity Utilization (Year 1) Capacity · first year · Medium confidence 15%, 20%
    So, I would believe from 0 to 100, we would get to the installed capacity maybe in within 3 to 4 years at even levels, maybe 15%, 20% capacity going in the first year, 30%, 35% by year 2 and so on.

    — Aryan Sehgal

  • New Product Capacity Utilization (Year 2) Capacity · year 2 · Medium confidence 30%, 35%

    — Aryan Sehgal

International Growth

  • International vs India Growth International Growth · next 3 to 4 years · Low confidence grow much faster internationally than grow in India
    So, the statistics say that it's natural for us to grow much faster internationally than grow in India, but we'll see how the external political environment all over the world plays up and what sort of stability the world continues to have over the next 3 to 4 years.

    — Aryan Sehgal

What to watch in Q4 FY26

Ramp-up of new capacities at Panchla facility

Next quarter / within 1-2 years for significant scale-up
Current Bioprocess products commissioned; cell culture sampling starting
Target Increased utilization rates; initial revenue contribution from cell culture

Why it matters

Key to realizing returns on significant past capex and driving future revenue growth.

Once the facility will be fully commissioned and revenue contribution commences, PAT margin is expected to return to normalized level.

Risks & concerns

  • Aggressive pricing strategies and increased competition in the domestic market

    medium

    Competitors with large fixed cost burdens from expanded capacities are engaging in aggressive pricing, keeping Tarsons' pricing under pressure.

    Management acknowledged

  • Heightened uncertainty and disruptions in international trade

    medium

    Geopolitical tensions and tariff-related disruptions have impacted international trade, though recent FTAs offer some relief.

    Management acknowledged

  • Slower-than-expected capacity utilization for new products/facilities

    medium

    Sweating new capacities will take longer than projected due to increased market competitiveness post-COVID.

    Management acknowledged

  • Government e-Marketplace (GeM) system hindering government business

    medium

    The GeM system's L1 process and lack of transparency force sub-optimal procurement, causing a setback for government business.

    Management acknowledged

  • External political environment and global stability impacting international growth

    medium

    The stability of the global political environment over the next 3-4 years is an important external factor influencing international growth.

    Management acknowledged

Q&A highlights

8 direct
Breakeven and utilization of new bioprocess capex Direct
I believe that at full capacity, most of these bioprocess containers, what we've set up in our new facility, could generate revenues of in excess of INR 150 crores. ... So I think we would be able to breakeven very, very easily even at much lower capacities, because once we come over our fixed cost at this point of time, we have multiple people which we have hired for this facility... so about INR 70 crores, INR 75 crores in revenue, we should be in cash positive, EBITDA positive numbers.

Provides specific revenue potential and breakeven thresholds for the newly commissioned bioprocess capacity.

Asked by Aditya

Utilization timeline for cell culture capex Direct
So, the sampling part is very, very quick, which should not take more than a few weeks all over India. But being able to enter into large companies, SOPs, and being able to become one of their preferred vendors or even one of the secondary vendors because they would have long-standing relationships with existing brands for many, many years, that would be the time-consuming process.

Highlights the longer sales cycle and challenges in gaining market share for new cell culture products due to established customer relationships.

Asked by Aditya

Impact of competition and pricing pressure Direct
Definitely, I think the markets got more competitive post the COVID era. So various product lines in which we expanded capacities. So, I think sweating those capacities will take us longer than what we had projected. ... And only about 25%, 30% of our capex was built in expanding capacity. So, I think there was a lot of expanded capacity, and then people have large fixed cost burden. And when that happens, people start going to new lows in pricing to be able to sweat their capacity.

Explains the root cause of current pricing pressure in the domestic market and differentiates Tarsons' capex strategy.

Asked by Aditya

Impact of India-EU and India-US FTAs on business Direct
The India-EU FTA is always welcome, because it makes our products more competitive, but the degree and the delta is small. We as it is were paying 6%. Our importers who are buying from us in Europe were paying 6% taxes, which will come down to 0 at a time when the FTA would be executed. But the U.S., if executed perfectly, and if the executive order is signed, it could be a big benefit because 50% coming down to 18% gives us a new lease of life and would definitely help expand our business in America.

Identifies significant potential tailwinds for export growth, particularly in the US market, from upcoming trade agreements.

Asked by Aditya

Increase in other income in Q3 FY26 Direct
So, the other income has been increased because of high forex income. There some forex income has been booked, because of the fact that lot of capex are there, for which we have given advance at much lower Euro rate, right? And now those machines has arrived at much higher euro rate, right? So that is the reason why the high forex income has been booked in this quarter.

Clarifies that the increase in other income is due to a non-recurring forex gain related to capex, not core operations.

Asked by Aditya

Margin profile of new products (cell culture, biopharma) Direct
Material margin-wise, it would be similar to what we currently work at. We work at about 68% to 70% gross margin across product lines, with the exception of a few which could be lower, and the exception of a few which could be higher. But EBITDA-wise, it would all depend on how we scale up over the next 2 to 3 years. So, material margin-wise, it should be similar.

Indicates that new products will have similar gross margins to existing ones, with EBITDA improvement dependent on achieving scale.

Asked by Rushabh Shah

Government procurement challenges via GeM Direct
See, the problem with the domestic business in India is that now it is controlled by GeM, which is called the Government e-Marketplace. And unfortunately, this is not the most organized way of purchase because vendors and suppliers with products which do not fit the needs of the customers. Customers are forced to buy from them because of the systems and because of the L1 process. So, I think the government business has taken a big setback over the last 3 to 4 years since GeM is getting more and more stronger each and every year.

Highlights a structural challenge in the Indian government procurement market that impacts the company's business.

Asked by Ajinkya Jhadav

Impact of currency depreciation on competitiveness Direct
No, I don't have a table to have a price difference between what the MNC offers and what we offer at. But you know the currency. The dollar which was 2 years back hovering around INR 80 now hovers at INR 90. So, it's like a 12%, 12.5% depreciation from INR 80 to INR 90.

Points to a favorable currency movement that enhances Tarsons' competitiveness against imported products from MNCs.

Asked by Nikhil

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Detailed narrative

Q3 FY26 Performance Overview

Tarsons Products reported a consolidated revenue of INR 108 crores for Q3 FY26, marking a 12.8% year-on-year growth. Consolidated EBITDA stood at INR 31.5 crores, with an EBITDA margin of 29.2%. Adjusted cash PAT showed robust growth of 38.6% year-on-year, reaching INR 31.4 crores. However, adjusted PAT grew at a slower pace of 21.4% to INR 6.4 crores, primarily due to higher depreciation expenses of INR 60.6 crores compared to INR 36.35 crores in the previous nine-month period, stemming from the partial capitalization of the Panchla facility.

Industry Tailwinds and Government Focus

The Indian plastic labware industry is projected for a healthy CAGR over the next 5-7 years, driven by growth in healthcare, diagnostics, biotechnology, and pharmaceutical research. The Union Government's budget reinforces this outlook with a 10% increase in overall budgetary allocation for healthcare and pharmaceuticals. A significant INR 100 billion allocation over five years for biopharma is expected to boost India's biologics and biosimilars ecosystem, thereby driving incremental demand for high-quality laboratory consumables.

Capacity Expansion and New Product Strategy

The company is commercializing its INR 600 crores capex from FY21-22 in FY26. This investment was strategically allocated, with 70% dedicated to building newer products like bioprocess containers and cell culture, along with land and building, and only 25-30% for expanding existing capacity. The bioprocess products have been commissioned and are already selling. Management expects new product capacities to reach 15-20% utilization in the first year and 30-35% by the second year, aiming for optimal levels within 2-3 years.

Competitive Landscape and Pricing Pressure

The domestic market is experiencing increased competition and aggressive pricing strategies, a trend that intensified post-COVID. Management noted that many competitors, having expanded capacities during the artificial demand surge, are now facing large fixed cost burdens and are resorting to aggressive pricing to utilize their capacities. Tarsons, however, emphasizes its volume-led growth, established brand, consistent supply, and high-quality products to outperform, leveraging its scale advantage and reliable supply capabilities.

International Market Dynamics and FTA Impact

While international trade has faced uncertainties due to geopolitical tensions, recent trade agreements with the EU and US are expected to provide relief. The India-EU FTA will reduce import taxes from 6% to 0%, offering a small but positive impact. More significantly, the India-US FTA, if executed, could reduce taxes from 50% to 18%, which is anticipated to be a major benefit and could significantly expand Tarsons' business in the American market. The company aims to leverage its manufacturing cost advantages and process efficiency to gain momentum in overseas markets.

Nerbe Performance and European Strategy

Nerbe, Tarsons' overseas subsidiary, saw a 22% increase in sales this quarter, primarily driven by rupee depreciation. Management acknowledged the challenging European economic environment but expects future growth for Nerbe to be propelled by the introduction of new products from Tarsons' facilities, particularly in cell culture, and through geographical expansion within the EU. The strategy involves replicating Nerbe's successful model in Germany across other key European geographies.

Government Procurement Challenges

The company highlighted that the Government e-Marketplace (GeM) system in India has created significant challenges for government business over the last 3-4 years. The L1 (lowest bidder) procurement process often leads to vendors supplying products that do not fully meet customer needs, and customers are compelled to buy them. This lack of transparency and customization has hindered the growth of the standard laboratory consumable business for top players in the government sector.

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