Buy TCPL Packaging; target of Rs 75: Sunidhi Securities

“TCPL Packaging (formerly known as Twenty-First Century Printers) was promoted by the Kanoria family and began commercial production in April 1990. It is one of India's largest manufacturers of printed folding cartons, and one of the few listed packaging companies in India. TCPL operates out of its six manufacturing units, three at Silvassa, 180 kms from Mumbai in Western India; the fourth and fifth at Haridwar, 200 kms from Delhi in Northern India and the sixth one in Goa. Exports constitute about 20% of TCPL's annual revenues. TCPL is a regular exporter to the food and bakery industry in the Netherlands and the UK. Its exports are to countries such as the UK, Netherlands, UAE etc. In FY12, exports stood at Rs50 crore.”

“During Q4FY12, sales advanced by 18.8% to Rs77.1 crore but net profit rose by 87.6% to Rs3.0 crore. OP and NP margin stood at 16.7% and 3.9% against 14.9% and 2.5% respectively in the corresponding period last year. Q4FY12 EPS stood at Rs3.5 and CPS (cash earning/share) Rs9.0. During FYY12, sales rose 17.7% to Rs279.2 crore and net profit by 22.2% to Rs7.7 crore (YoY). OPM and NPM stood at 11.6% and 2.4% compared to 8.7% and 0.9% respectively in FY11. EPS for FY12 works out at Rs8.9 whereas CPS stands at Rs29.5. The debt-equity ratio as on FY12 stood at 1.6:1 whereas the value of the net block stood at Rs149.0 crore Vs Rs115.6 crore in FY11.”

“TCPL is one of the two largest converters of paperboard in India. It prints Shells and Hinge Lid Blanks required by cigarette manufacturing companies and Cartons, Boxes & other packaging material for various companies in the booming liquor, FMCG, Food & Beverages segment and others. TCPL won several awards for excellence in printing from Paper, Film & Foil Converters Association for cartons manufactured for various customers. TCPL has core manufacturing business and enjoys reputation of a reliable packaging company for supply of various types of packaging materials to large foreign and domestic companies. It is presently consolidating its operations and working on new product offerings. As part of its expansion plans, TCPL recently purchased an additional plot of land in the vicinity Haridwar plant to set up a corrugation unit that will mainly produce E-flute corrugated cartons. The unit was expected to commence operation by Q1FY13. These activities, TCPL is confident will deliver robust growth in next few years.”

“Currently it does not have any plan for inorganic growth, but it may consider if suitable opportunity is available. TCPL has grown at CAGR of over 20% in the last 5 years. Riding high on the demand of its products, TCPL aims to achieve sales of Rs1000 crore in the next 5 years. At the CMP of Rs46, the share is trading at a P/E of 3.4x on FY13E and 2.3x on FY143E. We recommend BUY with a target of Rs75 in the medium-to-long term,” says Sunidhi Securities research report.   

Public holding more than 90% in Indian cos   

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