TCPL Packaging - Probable Candidate To Repeat Manjushree Technopack

When we decided to enter Manjushree Technopack, it was a risk taken entering in such industry where debt levels are high on account capital intensive nature of work. We were highly surprise to see it rewarding nearly 75% within less than 3 months of its recommendation here. But from that, it seems that market is ready to rewards stocks which have strong presence in markets and goodwill among some of the high profile customers, inspite of high debt levels. In the similar business, but in a different sector, we have a company, which is providing an alternative packaging provision i.e. Cartons, to various industries in form of TCPL Packaging.

TCPL Packaging Ltd is one of India's largest manufacturers of printed folding cartons.
Today, TCPL Packaging operates at six manufacturing units, three in Silvassa, two in Haridwar, one in Goa. All the plants are ISO 9001: 2008, ISO 22000 : 2005 certified and are also compliant with BRC/IoP Global Standard-Packaging Issue 3, which is suitable for direct food contact. In addition, plants at Silvassa and Haridwar are also FSC certified & SEDEX Compliant.
TCPL is one of the largest exporters of printed cartons from India. It regularly caters to consumers in countries like UK, The Netherlands, UAE, Bangladesh etc.
Exports constitute about 22% of TCPL's annual revenues.

TCPL manufactures following range of products:
Printed blanks & outers, Folding cartons, Litho Lamination, Plastic cartons, Blister paper, Shelf ready packaging.

Industries Served:
-- Liquor
-- Food & Beverages
-- FMCG
-- Pharma
-- Few Others

List Of Esteemed Custormers:
http://www.tcpl.in/portfolio_customers.html

From 34 lacs sales in 1990, to 395 Cr sales today, the company has made its presence felt in the market. Currently the company converts more than 3500 tons of paperboard every month.
One of the finest company in the similar sector, is Paper Products Ltd (Ofcourse, with many other products in their portfolio)., which is also fundamentally strong company. But looking at the data, it is presently having more than 8 times the market cap as that of TCPL, and having 2.5 times the sales. Hence TCPL provides a better opportunity at current market price, but that comes with a cost that TCPL is not so popular among investors, and hence may test ones patience to stay connected with the script.

The AR Packaging Group AB, Lund Sweden and TCPL Packaging signed a strategic partnership agreement on 22nd October, 2012. The objective of the agreement is a strategic partnership mainly in co-operation in the manufacturing, sourcing and sales and marketing in India for the solid folding carton market. 

Over the past 5 years, the company has shown CAGR of 26% in sales and 45% in profit. The company has regularly paid dividend and that too with decent dividend yield.
The updated balance sheet shows an increase in Fixed Assets as well as Capital Work In Progress. It may have a positive impact in the future.
The book value of the company is also strong at almost 90 Rs per share.
As per the Dec'13 numbers, one can see in the notes section of the result sheet that the Company has decided to expand its operations by setting a plant near Guwahati in State of Assam. It is expected to be ready for commercial production by the end of year 2014.

My Views:
The company ended FY'14 with the sales figure of 395 Cr and net profit of 12.5 Cr. The net profit remained sub-dued throughout the year on account of higher input cost, and as always, it hardly matters to us until the company keeps growing with sales every year, and leaving no stone unturned for expansion, if possible.
For the full year, the company reported an EPS of 14.37, which makes the P/E ratio look cheap at close to 7, against the industry wide average P/E of 16. Company has declared dividend of 2.5 Rs per share this year, which is slightly lesser than 2.65 Rs per share paid last year, but that is because of lesser net profit. Still, a yield of close to 2.5% is not bad.
One has to understand that liquidity has always been an issue in the counter, and hence it is prone to violent movements in either direction based on performance. The recommendation here is for long term, so one might have to wait till a period when company will have enough to attract big investors, and hence, be a regularly traded counter on stock exchange.
As said earlier also, it might test ones patience, so enter, based on your risk profile, and your understanding of the company's future.
Not invested so far, but will look to enter in future, when I will have enough cash in hand. :)