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Dalal Street Investment Journal - - CONTENTS -

In­creas­ing de­mand from cus­tomers Im­proved ef­fi­ciency Ex­port re­al­i­sa­tions

TCPL Pack­ag­ing Ltd is one of In­dia's largest man­u­fac­tur­ers of printed fold­ing car­tons and is one of few listed pack­ag­ing com­pa­nies in In­dia.

The FMCG in­dus­try is ex­pected to be on a growth tra­jec­tory in line with the coun­try's growth in de­mand for FMCG goods. TCPL Pack­ag­ing Ltd is sup­plier to the FMCG in­dus­try and can be ex­pected to ben­e­fit from the growth in FMCG sec­tor and the over­all growth in the econ­omy. Ow­ing to good mon­soons this sea­son, the de­mand is ex­pected to re­vive for most of the in­dus­tries in In­dia.

The ex­pected eco­nomic growth can cre­ate myr­iad pack­ag­ing op­por­tu­ni­ties for TCPL due to re­vival in re­quire­ments of FMCG, food, to­bacco, liquor and other con­sumer prod­uct man­u­fac­tur­ers.

TCPL man­u­fac­tur­ing units are strate­gi­cally lo­cated to tap ex­port op­por­tu­ni­ties as well as to meet in­creas­ing domestic de­mand.

In­vestors look­ing at in­vest­ing op­por­tuni- ties in pack­ag­ing in­dus­try need to un­der­stand that there con­tin­ues to be in­crease in ca­pac­ity of pack­ag­ing man­u­fac­tur­ers, re­sult­ing in over­sup­ply, cou­pled with in­crease in costs on ac­count of in­fla­tion. The in­creased cost is a re­sult of not only the price rise in raw ma­te­ri­als, but also due to in­crease in op­er­at­ing ex­penses.

The out­look for TCPL is good as the com­pany mit­i­gates its busi­ness risks by con­tin­u­ous in­crease in its pro­duc­tiv­ity. There is a vis­i­ble in­crease in de­mand by cus­tomers of TCPL. The ex­port re­al­i­sa­tion is high for TCPL and there is a healthy ad­di­tion of cus­tomers on a reg­u­lar ba­sis.

With ex­pan­sion plans in place and over­all pos­i­tive out­look in the in­dus­try, TCPL is a good buy at the cur­rent lev­els.

On the fi­nan­cial front, TCPL Pack­ag­ing’s rev­enue de­creased 9.17 per cent to

₹ 139.81 crore in Q4FY17, as com­pared to the same pe­riod in the pre­vi­ous fis­cal. The com­pany’s PBIDT de­clined 41.82 per cent to ₹ 10.74 crore in Q4FY17 on a yearly ba­sis. The com­pany’s net profit also de­clined 41.71 per cent to

₹ 5.49 crore in Q4FY17 on a yearly ba­sis.

On an an­nual ba­sis, the com­pany’s rev­enue de­creased by 2.59 per cent to ₹ 595.96 crore in FY17 from ₹ 580.91 crore in the pre­vi­ous fis­cal. The com­pany’s PBIDT stood at ₹ 68.70 crore in FY17, down by 8.83 per cent from

₹ 75.36 crore in the pre­vi­ous fis­cal. The com­pany’s net profit stood at ₹ 33.21 crore, down by 13.24 per cent in FY17 from ₹ 38.28 crore in FY16.

On the val­u­a­tion front, the share price of TCPL Pack­ag­ing is trad­ing at a PE mul­ti­ple of 17.91x as against peers such as Uflex Lim­ited (9.13x), Mold Tek Pack­ag­ing Lim­ited (31.95x). The com­pany’s PE mul­ti­ple is higher as com­pared to in­dus­try PE mul­ti­ple of 9.85x. The com­pany’s ROE stood at

18.66 per cent and ROA at 5.48 per cent in FY17, while it’s to­tal debt-to-eq­uity ra­tio stood at 1.46x in FY17.

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