Tarsons FY26: revenue growth continues, but the capex bill shows up in profits

Tarsons Products ended FY26 with steady top line growth, but a sharp drop in reported profitability as new facilities moved into the depreciation phase. Consolidated revenue for FY26 was INR 422.5 crore, up 7.7% year on year. Consolidated EBITDA was INR 117.9 crore, up 7.0%. Reported consolidated PAT, however, declined to INR 14.3 crore from INR 29.8 crore in FY25.

The company’s explanation is consistent across the investor presentation and the earnings call. Panchla and Amta, the two large capacity additions, have started commercial supplies, but are still in the ramp-up stage. The fixed cost base, depreciation and finance costs have risen faster than revenue from these new assets. Management indicated that revenue contribution from the new facilities is expected to commence from FY27, with full commissioning targeted by H1FY27.

Q4FY26: domestic strength offsets export disruption

In Q4FY26, Tarsons reported its highest ever quarterly consolidated revenue of INR 120.9 crore, up 7.3% year on year. The domestic business was the key driver. Standalone domestic revenue rose 12% year on year to INR 73.9 crore, supported by improving customer sentiment and demand traction.

Exports were weaker in the quarter. Standalone export revenue fell 13% year on year to INR 23.3 crore. Management attributed the decline to Middle East geopolitical disruption that impacted transit time, container availability, freight costs and shipment timelines.

At the consolidated level, EBITDA margin compressed to 28.3% in Q4FY26 from 32.9% in Q4FY25. Management linked this to two factors: a sharp increase in raw material prices during February and March, and operating expenses related to the commissioning and operations of the new plants.

FY26 financial snapshot: cash profits remain resilient

A key feature of FY26 was the divergence between accounting profits and cash profits. While reported PAT declined, cash generation held up.

Consolidated Cash PAT increased to INR 112.0 crore in FY26 from INR 92.3 crore in FY25, a 21.4% year on year rise. Operating cash flow was INR 118.5 crore, slightly higher than INR 114.2 crore in FY25. The company also reported that cash flow from operations to EBITDA was 100.5% in FY26.

The reason for the PAT decline is visible in the consolidated profit and loss statement. Depreciation rose to INR 96.5 crore in FY26 from INR 62.5 crore in FY25. Finance costs also increased to INR 22.5 crore from INR 19.4 crore.

What the revenue mix says about the business model

Tarsons positions itself as a diversified labware platform. The investor presentation discloses that consumables contributed 58.9% of FY26 revenue, reusables contributed 38.1%, and others contributed 3.0%.

This mix matters because the company’s growth thesis is tied to widening the product basket and reducing reliance on a narrow set of categories. The company highlighted 2,000 plus SKUs across 350 product segments, sold into laboratories across research organisations, academia, pharmaceuticals, CROs, diagnostics and hospitals.

The company also reiterated that export operations combine branded sales and ODM sales. As of March 31, 2026, it reported sales to 40 plus countries via 45 plus authorised distributors and partners. The export mix for FY26 was disclosed as 66% branded and 34% ODM.

Capex transition: commissioning timelines and the depreciation peak

Management framed FY26 as a transition year, with the heavy investment phase largely behind the company. The key near-term execution milestone is commissioning completion.

On the earnings call, management said the entire capex program is expected to be fully commissioned during the first half of FY27. It also stated that trial runs are underway for certain product lines and facilities.

The CFO provided a more explicit view on depreciation. He stated that standalone depreciation is expected to rise and could be in the range of INR 105 crore to INR 110 crore in FY27, which management described as the peak level. This is linked to capitalisation of remaining CWIP, which stood at INR 158.6 crore on the consolidated balance sheet at March 2026.

Capex intensity is expected to drop sharply after the current program closes. The CFO stated there is no additional major capex planned beyond completing what is already under execution, with FY27 capex expected to be around INR 20 crore, mainly maintenance and commercially required spend.

Cell culture and bioprocess: measured ramp, not an overnight leap

Tarsons is expanding into cell culture and related product lines. The presentation includes products such as cell culture flasks, plates, dishes and roller bottles. Management acknowledged on the call that ramp-up in these categories will be gradual.

The company said certain cell culture lines have been commercially launched in the last 2 to 3 months, and customers will take time to test and validate products before allocating meaningful volumes. Management indicated that significant momentum is expected from year 2 of launch, which it mapped to end of FY27 or beginning of FY28.

It also stated that pilot production has started for some lines, with additional lines expected to start pilot production in the current quarter, and that in 2 to 3 months it expects all lines to be producing and supplying samples.

Margin outlook: raw material volatility remains the near-term variable

The largest near-term uncertainty is raw material pricing and supply availability. Management said raw material prices spiked sharply, and it expects Q1FY27 to be affected in a similar region to Q4FY26. It also stated it has started gradually increasing prices in FY27 on a product-by-product basis.

However, management also explained why full pass-through is difficult. It pointed to inventory in the system, competing importers and MNC stocks, and the risk that large, sudden price increases would open opportunities for other players to take share.

While the company did not provide formal margin guidance, management indicated it believes gross margin should not go below 65%, while also noting pricing actions are ongoing.

Takeaways for investors

FY26 reinforced two points at once. First, Tarsons is still growing and is seeing improving domestic demand, with consolidated revenue up 7.7% and Q4FY26 being the highest ever quarterly revenue. Second, the company is now in a phase where depreciation and finance costs from its expansion program will suppress reported profits until utilisation catches up.

Management’s stated focus for the next 2 to 3 years is to ramp up capacity, broaden the product portfolio, and generate larger cash profits to deleverage. The credibility of this plan will depend on how quickly Panchla and Amta reach stable utilisation, how well the company navigates raw material volatility, and whether export momentum normalises after the supply chain disruptions seen in Q4FY26.