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Monday, February 21, 2011

Tinplate Company of India Ltd:-Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Tinplate Company of India Ltd

Story:The Tinplate Company of India (TCIL) is the country’s largest producer of tinplate. Established in 1922, the company pioneered the manufacture of tinplate in India; today it accounts for over a third of the market. The company's products are used for canning and packaging of goods in the processed foods, paints, beverages, dairy products and other industries.TCIL is in the business of providing metal packaging solutions. Its main products are electrolytic tinplates, tin-free steel sheets and cold-rolled products.It manufactures electrolytic tinplates or tin-free steel — from hot-rolled coils supplied by Tata Steel — for can fabrication to pack edible oils, processed foods, dairy products, beverages, pesticides, and paints, and for manufacturing battery components. The company has a technical agreement with Nippon Steel of Japan.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 per capita consumption of tinplate in India is relatively very low at 0.3-0.4 kg vis-à-vis the developed economies average of 8-12kg, China per capita tin consumption is 1kg. Indian Govt’s vision 2015 has set the target to treble the size of processed food industry to Rs 13.50 lac crore by FY15 from Rs 4.6 lac Crs in FY04. The industry is expected to grow at 10% p.a. over next 5 years period. 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.TCIL is amidst a massive capacity expansion spree to enhance its production capacity with a total capex of Rs 622 crore of which it has already incurred Rs 200 crore in October 08. Through this expansion, the electrolytic tinplate and tin free steel production capacity of the company has doubled from 179000 Ton p.a. to 379000 Ton p.a. The company is in the process of setting Cold Rolling mill which is expected to be on stream in the next fiscal expanding the Cold rolling mill capacity to 380000 Ton p.a. from current 190000 Ton p.a. The new cold rolling mill once operational will make the TCIL self sufficient in terms of TMBP which is used to feed tinning lines and enhance its overall margins.The company is expected to close fy11 with a turnover of 900crs and a PAT of 52crs.At present price of 63 its quoting at 9 times its forward earnings.Being from the TATA stable the company never actually performed over the last 5 years.With numbers expected to be robust in the coming quarters tinplate should outperform the markets bigtime.Tinplate Company of India Ltd is all set to become a scrip which should write a new scripture in the days and months to come.A great buy at dips.

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