Tinplate Company may test Rs 120 in 1 year, says Prakash Diwan

Prakash Diwan of prakashdiwan.in told CNBC-TV18, "These are difficult times, you need to find some safer stocks, so I thought I will go with the Tata name. A lot of people probably don’t know Tinplate Company of India is a Tata company, it has been around for 90 years doing the same old business of selling tin plates, manufacturing tin plates and electrolytic tin plates as they are technically called which are food grade positive which means that you can store canned food, beverages, etc apart from the tin cans being used and things like paints and other things." "This company is a market leader of sorts. It has never lost market share ever since it has been in this business. The last couple of quarters have been extremely positive. The change is that tin as commodity prices soften globally have also kind of come down. So, from a very simple margin profile of about 16-18 percent, their operating margins have moved to about 25-27 percent," he said."In the first two quarters of this financial year, they have already clocked an EPS of about Rs 4 plus as against a Rs 3.80 EPS of full year last year. So, that is operating leverage coming into the picture. It has decent market cap, Rs 750 crore odd with Rs 900 crore topline, Tata’s don’t give up their shareholding so it is about 75 percent they have been holding that on. The other thing which is changing now for them is that a lot of higher end products like watches, liquor and jewellery has started getting packed in tins and these things." "Tin packaging and it is biodegradable is recyclable, it is environment friendly. So all of that is kind of positive and luckily they don’t have much of exports. So, 20-25 percent is what they export, nothing from China or to China, so it is a dragon proof kind of a stock from that perspective as well. What I like about this company is that it has hardly got any debt."He further said, "The stock is available at about 10-11 PE on a trailing basis. Now, if that operating leverage which I am referring to comes into picture and if you look at the 52 week high-lows, it is at Rs 51 and high is about Rs 71, you really don’t have a stock that is kind of gyrated between two points and it is very volatile. So, you play it safe, great risk reward ratio, I would not be surprised if it crosses Rs 120 in 12 months. So, that is the target I have assigned right now."