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Investment Rationale
• Tinplate is one of the industry leaders with a
market share of 35%
• Tata Steel holds 45% stake in the company
• TCIL’s capacity expansion, enhancing margins
and economies of scale
• Low on debt to equity ratio
• Industry Outlook – growth drivers
Company Background
Tinplate Company of India Ltd (TCIL) a TATA Enterprise
and India’s largest indigenous producer of tin coated
and tin free steel sheets is promoted by Tata Steel, the
5th largest steel producer in the World. Tinplate has
leadership position for 90 years in its field. The
company is the pioneering position of tinplate in India.
TCIL provides tinplate packaging solutions to the food
processing industry and also caters to other industries
like Chemicals, Paints, Electronics and Defense etc.
The manufacturing facilities of the company are located
at Jamshedpur in the state of Jharkhand.
Valuations
The company with an ROE of 30% and BV of Rs. 43 we
see company’s growth to continue on India’s
consumption story going forward. At CMP 64 Tinplate
trades at 10.75x FY11E earnings and 7.31x FY12
earnings. We look forward for a price target of Rs. 120
in next 12-18 months.
• Tinplate is one of the industry leaders with
a market share of 35%
The company is pioneering the production of tinplate in
India and is one of the industry leaders with a market
share of 35%. Growth in the packaging sector is closely
linked to the processed foods and beverage industry,
which is expected to grow at 18-20% in 2011 and
Tinplate is well paced to take advantage of this.
• Tata Steel holds 45% stake in the company
This stake will rise to 60% in the April after the
conversion of FCCB’s and this will lead Tinplate to
become the subsidiary of Tata Steel. Tinplate will
become one of the largest self sufficient tinplate
producing facilities across South East Asia and West
Asia. The company has a total export market of 25-30%
to countries like South East Asia and West Asia and
other neighboring countries.
• TCIL’s capacity expansion enhancing margins and
economies of scale
TCIL has an installed capacity of 379,000 tonnes per
annum and is running at around 60% of its total
capacity. The company has set up an additional coldrolling
mill which will help feed its tinning lines and
bring about better economies of scale enhancing the
overall margins as well. On completion, Company will
become one of the largest self sufficient tinplate
producing facilities across South East Asia and West
Asia.
• Low on debt to equity ratio
The debt to equity ratio for the company is ~0.79x which
augurs well for the company as it is in its expansion
phase and can leverage its balance sheet if needed.
• Industry Outlook – growth drivers
Approx 65-70% of global tinplate consumption is for
Edible Oil, processed foods and beverages. Current
tinplate consumption in India is approx 3.5-4 lac ton p,a.
The industry is expected to grow @ 10-12% p.a. over
next 5 years period. Rising disposable income with
India's middle-class, leading to higher demand for
processed foods and beverages and in turn, packaging
material, is one of the primary growth drivers for the
company. The Rs 65,000-crore packaging industry in
India has been growing at 10% annually over the past
couple of years, and metal packaging accounts for 8-
10% of this industry. Changing consumption habits with
under penetrated market leaves further scope for
growth. TCIL being market leader in India will be
inherent beneficiary from this growth.
Valuations
The company with an ROE of 30% and BV of Rs. 43 we
see company’s growth to continue on India’s
consumption story going forward. At CMP 64 Tinplate
trades at 10.75x FY11E earnings and 7.31x FY12
earnings. We look forward for a price target of Rs. 120
in next 12-18 months.
Concerns
Fluctuating input costs is putting pressure on the
operating margins and company is unable to pass it on
to the consumers.
Threat from substitutes.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Investment Rationale
• Tinplate is one of the industry leaders with a
market share of 35%
• Tata Steel holds 45% stake in the company
• TCIL’s capacity expansion, enhancing margins
and economies of scale
• Low on debt to equity ratio
• Industry Outlook – growth drivers
Company Background
Tinplate Company of India Ltd (TCIL) a TATA Enterprise
and India’s largest indigenous producer of tin coated
and tin free steel sheets is promoted by Tata Steel, the
5th largest steel producer in the World. Tinplate has
leadership position for 90 years in its field. The
company is the pioneering position of tinplate in India.
TCIL provides tinplate packaging solutions to the food
processing industry and also caters to other industries
like Chemicals, Paints, Electronics and Defense etc.
The manufacturing facilities of the company are located
at Jamshedpur in the state of Jharkhand.
Valuations
The company with an ROE of 30% and BV of Rs. 43 we
see company’s growth to continue on India’s
consumption story going forward. At CMP 64 Tinplate
trades at 10.75x FY11E earnings and 7.31x FY12
earnings. We look forward for a price target of Rs. 120
in next 12-18 months.
• Tinplate is one of the industry leaders with
a market share of 35%
The company is pioneering the production of tinplate in
India and is one of the industry leaders with a market
share of 35%. Growth in the packaging sector is closely
linked to the processed foods and beverage industry,
which is expected to grow at 18-20% in 2011 and
Tinplate is well paced to take advantage of this.
• Tata Steel holds 45% stake in the company
This stake will rise to 60% in the April after the
conversion of FCCB’s and this will lead Tinplate to
become the subsidiary of Tata Steel. Tinplate will
become one of the largest self sufficient tinplate
producing facilities across South East Asia and West
Asia. The company has a total export market of 25-30%
to countries like South East Asia and West Asia and
other neighboring countries.
• TCIL’s capacity expansion enhancing margins and
economies of scale
TCIL has an installed capacity of 379,000 tonnes per
annum and is running at around 60% of its total
capacity. The company has set up an additional coldrolling
mill which will help feed its tinning lines and
bring about better economies of scale enhancing the
overall margins as well. On completion, Company will
become one of the largest self sufficient tinplate
producing facilities across South East Asia and West
Asia.
• Low on debt to equity ratio
The debt to equity ratio for the company is ~0.79x which
augurs well for the company as it is in its expansion
phase and can leverage its balance sheet if needed.
• Industry Outlook – growth drivers
Approx 65-70% of global tinplate consumption is for
Edible Oil, processed foods and beverages. Current
tinplate consumption in India is approx 3.5-4 lac ton p,a.
The industry is expected to grow @ 10-12% p.a. over
next 5 years period. Rising disposable income with
India's middle-class, leading to higher demand for
processed foods and beverages and in turn, packaging
material, is one of the primary growth drivers for the
company. The Rs 65,000-crore packaging industry in
India has been growing at 10% annually over the past
couple of years, and metal packaging accounts for 8-
10% of this industry. Changing consumption habits with
under penetrated market leaves further scope for
growth. TCIL being market leader in India will be
inherent beneficiary from this growth.
Valuations
The company with an ROE of 30% and BV of Rs. 43 we
see company’s growth to continue on India’s
consumption story going forward. At CMP 64 Tinplate
trades at 10.75x FY11E earnings and 7.31x FY12
earnings. We look forward for a price target of Rs. 120
in next 12-18 months.
Concerns
Fluctuating input costs is putting pressure on the
operating margins and company is unable to pass it on
to the consumers.
Threat from substitutes.
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