tpl plastech ltd overweight isin: plastic products… · tpl plastech ltd result update (parent...

Document code: FOTL_121020184_1 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved

TPL PLASTECH LTDResult Update (PARENT BASIS): Q1 FY19

CMP: 206.90 OCT 12th, 2018

Overweight ISIN:INE413G01014

Index DetailsSYNOPSIS

TPL Plastech Limited (TPL) was incorporated in

1992 and its manufacturing operations commenced

in 1995, with a plant in Silvassa.

The company turnover registered at Rs. 487.99 mn

for the 1st quarter of the financial year 2018-19 as

against Rs. 431.85 mn in the corresponding quarter

of the previous year.

During the quarter, EBIDTA stood at Rs. 64.10 mn

as against Rs. 55.47 mn in the corresponding period

of the previous year, up by 15.56%.

PBT of the company for the Q1 FY19 registered at

Rs. 41.29 mn as compared to Rs. 37.00 mn in Q1

FY18.

During the quarter, net profit of the company

jumped by 15.83% to Rs. 28.13 mn from Rs. 24.29

mn in the corresponding quarter ending of previous

year.

EPS of the company registered at Rs. 3.61 during

Q1 FY19 as against Rs. 3.11 per share in Q1 FY18.

Net Sale and PAT of the company are expected to

grow at a CAGR of 6% and 16% over 2017 to

2020E, respectively.

Stock DataSector Plastic ProductsBSE Code 526582Face Value 10.0052wk. High / Low (Rs.) 780.90/181.00Volume (2wk. Avg.) 1124Market Cap (Rs. in mn.) 1613.88

Annual Estimated Results(A*: Actual / E*: Estimated)Years(Rs in mn) FY18A FY19E FY20ENet Sales 1920.03 2150.44 2386.98EBITDA 243.44 276.40 305.14Net Profit 124.27 137.98 154.66EPS 15.93 17.69 19.83P/E 12.99 11.70 10.43

Shareholding Pattern (%)

As on June 2018 As on Mar 2018

Promoter 75.00 75.00

Public 25.00 25.00

Others -- --

1 Year Comparative Graph

TPL PASTECH LTD S&P BSE SENSEX

PEER GROUPS CMP MARKET CAP EPS(TTM) P/E(X)(TTM) P/BV(X) DIVIDENDCompany Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)TPL Plastech Ltd 206.90 1613.88 16.42 12.59 12.99 35.00JBF Industries 23.75 1944.50 -- -- 0.13 0.00Vinyl Chemicals India Ltd 74.50 1366.10 6.39 11.66 2.46 240.00Pasupati Acrylon Ltd 19.90 1773.70 3.92 5.08 1.19 0.00


QUARTERLY HIGHLIGHTS (PARENT BASIS)

Results updates- Q1 FY19,

(Rs. in million) June-18 June-17 % Change

Revenue 487.99 431.85 13.00%

Net Profit 28.13 24.29 15.83%

EPS 3.61 3.11 15.83%

EBIDTA 64.10 55.47 15.56%

The company turnover registered at Rs. 487.99 million for the 1st quarter of the financial year 2018-19 as against Rs.

431.85 millions in the corresponding quarter of the previous year, up by 13.00%. During the quarter, net profit jumped by

15.83% at Rs. 28.13 million from Rs. 24.29 million in the corresponding quarter ending of previous year. The Company’s

earnings per share stood at Rs. 3.61 during Q1 FY19 as against Rs. 3.11 per share in Q1 FY18. Profit before interest,

depreciation and tax is Rs. 64.10 million as against Rs. 55.47 million in the corresponding period of the previous year, up

by 15.56%.

Break up of Expenditure

Break up ofExpenditure

(Value in Rs. Millions)

Q1 FY19 Q1 FY18 %Change

Cost of MaterialConsumed 413.99 348.40 19%

Employee BenefitsExpenses 20.52 18.52 11%

Depreciation &Amortization Expenses 9.70 7.60 28%

Other Expenses 34.83 31.99 9%


COMPANY PROFILE

TPL Plastech Limited (TPL) was incorporated in 1992 and its manufacturing operations commenced in 1995, with a plant

in Silvassa. The company manufactures rigid polymer drums and containers and expanded by addition of High Density

Polyethylene (HDPE) Pipes processing ranging from 100-600 mm diameter at Pantnagar (Uttarakhand) to serve the

northern region. TPL has 5 manufacturing plants across India and has a total capacity of 28,000 MT and employs over

280 personnel. Growing steadily, TPL has became the 2nd largest manufacturer of drums in India, especially Bulk

Packaging. TPL has a huge client base catering to more than 225 customers in chemical & petrochemical industry.


FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20E

ASSETS1) Non-Current Assets

a) Property, plant and equipment 508.60 658.17 776.64 893.13b) Capital Work in Progress 61.27 41.51 51.89 62.27c) Financial Assets

i) Investments 0.00 10.00 10.50 11.13ii) Deposits & Other Financial Assets 6.04 11.17 13.96 16.47

d) Current Tax Assets (Net) 18.18 15.47 17.32 18.88e) Other Non-Current Assets 10.69 13.46 15.89 18.43Sub Total Non- Current Assets 604.77 749.78 886.20 1020.32

2) Current Assetsa) Inventories 301.02 518.33 663.46 829.33b) Financial assets

i) Trade receivables 435.50 475.15 503.66 528.85ii) Cash and Cash equivalents 4.81 10.22 13.08 16.48iii) Other Bank Balances 5.60 6.55 7.73 9.67

c) Other Current Assets 124.71 162.20 197.89 233.51Sub Total - Current Assets 871.63 1172.46 1385.83 1617.83

Total Assets (1+2) 1476.40 1922.24 2272.03 2638.15EQUITY AND LIABILITIES1) EQUITY

a) Equity Share Capital 78.00 78.00 78.00 78.00b) Other Equity 535.63 634.31 772.29 926.95

Total Equity 613.64 712.31 850.29 1004.952) Non Current Liabilities

a) Financial Liabilitiesi) Borrowings 75.70 160.97 201.21 241.45

b) Deferred Tax liabilities (Net) 73.64 81.59 88.93 95.16Sub Total - Non Current Liabilities 149.34 242.55 290.14 336.61

3) Current Liabilitiesa) Financial liabilities

i) Borrowings 282.46 345.56 400.84 448.95ii) Trade Payables 384.12 529.80 618.99 717.64iii) Other financial liabilities 30.43 77.51 96.89 114.33

b) Other Current Liabilities 6.65 3.95 3.35 3.09c) Provisions 3.33 3.09 3.00 2.97d) Current Tax Liabilities 6.43 7.47 8.52 9.62Sub Total - Current Liabilities 713.42 967.38 1131.60 1296.59

Total Equity and Liabilities (1+2+3) 1476.40 1922.24 2272.03 2638.15


Annual Profit & Loss Statement for the period of 2017 to 2020E

Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Description 12m 12m 12m 12mNet Sales 1801.47 1920.03 2150.44 2386.98Other Income 1.06 0.06 0.07 0.08

Total Income 1802.53 1920.09 2150.50 2387.06

Expenditure -1583.14 -1676.65 -1874.10 -2081.93

Operating Profit 219.39 243.44 276.40 305.14Interest -43.83 -44.44 -48.88 -52.79

Gross profit 175.56 199.01 227.52 252.34

Depreciation -28.54 -31.79 -37.20 -41.66

Profit Before Tax 147.02 167.21 190.32 210.68

Tax -34.22 -42.94 -52.34 -56.02

Net Profit 112.80 124.27 137.98 154.66Equity capital 78.00 78.00 78.00 78.00

Reserves 535.63 634.31 772.29 926.95

Face value 10.00 10.00 10.00 10.00

EPS 14.46 15.93 17.69 19.83

Quarterly Profit & Loss Statement for the period of 31st Dec, 2017 to 30th Sep, 2018E

Value(Rs.in.mn) 31-Dec-17 31-Mar-18 30-June-18 30-Sep-18E

Description 3m 3m 3m 3mNet sales 469.66 563.82 487.99 463.59

Other income 0.02 0.01 0.02 0.02

Total Income 469.68 563.83 488.01 463.61

Expenditure -410.78 -490.41 -423.91 -404.57

Operating profit 58.90 73.42 64.10 59.03

Interest -10.78 -12.02 -13.10 -13.63

Gross profit 48.12 61.40 50.99 45.41

Depreciation -8.41 -8.56 -9.70 -10.19

Profit Before Tax 39.71 52.84 41.29 35.22

Tax -12.87 -10.11 -13.16 -9.37

Net Profit 26.84 42.73 28.13 25.85

Equity capital 78.00 78.00 78.00 78.00

Face value 10.00 10.00 10.00 10.00

EPS 3.44 5.48 3.61 3.31


Ratio Analysis

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 14.46 15.93 17.69 19.83EBITDA Margin (%) 12.18% 12.68% 12.85% 12.78%PBT Margin (%) 8.16% 8.71% 8.85% 8.83%PAT Margin (%) 6.26% 6.47% 6.42% 6.48%P/E Ratio (x) 14.31 12.99 11.70 10.43ROE (%) 18.38% 17.45% 16.23% 15.39%ROCE (%) 19.64% 17.36% 16.47% 15.54%Debt Equity Ratio 0.58 0.71 0.71 0.69EV/EBITDA (x) 8.94 8.64 7.94 7.47Book Value (Rs.) 78.67 91.32 109.01 128.84P/BV 2.63 2.27 1.90 1.61

Charts


OUTLOOK AND CONCLUSION

At the current market price of Rs. 206.90, the stock P/E ratio is at 11.70 x FY19E and 10.43 x FY20E respectively.

Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs. 17.69 and Rs. 19.83

respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 6% and 16% over 2017 to 2020E,

respectively.

On the basis of EV/EBITDA, the stock trades at 7.94 x for FY19E and 7.47 x for FY20E.

Price to Book Value of the stock is expected to be at 1.90 x and 1.61 x for FY19E and FY20E respectively.

Hence, we say that, we are overweight in this particular scrip for Medium term investment.

INDUSTRY OVERVIEW

The global market for industrial packaging is estimated to be around $52 bn and is forecasted to reach $61 billion by 2020

clocking a growth rate of 3.4% per annum.

Globally, Industrial packaging industry is largely dependent on four key user industries:

Chemicals and pharmaceuticals

Lubricants

Bulk food and beverages

Building and construction

In Industrial Packaging sector, Drums and IBCs together accounted for 1/3rd of the market in 2013, but is forecasted to

represent 36% of total usage by 2020, with the strongest growth expected in IBCs.


The main drivers for Industrial Packaging are:

Underlying end customer industry growth

Standardization across packaging segments

Substitution effects

Industry consolidation

Competition by alternative packaging and sustainability

Future Outlook, Opportunities and Threats:

India’s plastics industry is one of the biggest in the world. Industry volumes are estimated at 16MMTPA (in FY17), with

market size at INR 1.8 Tn. In volume terms, the industry has grown at a CAGR of 10% over FY10-17 and is expected to

grow at a CAGR of 10.5% to 22MMTPA by FY20. However, in value terms, the plastics industry has grown at a CAGR

of 11% over FY10-17. The rapid growth can be ascribed to substitution of other materials, low cost and high product-to-

package ratio, shifting consumer lifestyles, higher middle-class population and rising per capita income and growth of the

organized retail market.

India is the sixth largest producer of chemicals globally and the third largest producer in Asia in terms of output. The

country ranks third globally in the production of agro chemicals and contributes around 16 per cent to the global dyestuff

and dye intermediates production.

Indian chemicals sector is highly diversified, covering more than 70,000 commercial products. It is broadly classified as

basic chemicals, speciality chemicals and agrochemicals. India’s proximity to the Middle East, the world’s source of

petrochemicals feedstock, makes for economies of scale. In April-Dec ember 2017, total Foreign Direct Investments

(FDI) in chemicals (excluding fertilizers) stood at USD 1,137 Mn, whereas cumulative FDI from April 2000 to December

2017 was USD 14.430 Bn.

The Indian chemicals sector registered double-digit growth over FY13-FY18, supported by subdued oil prices and strong

domestic and export demand. Given R&D investment, the operational efficiencies continue to grow. The sector

profitability is expected to be sustained in 2018 and, thus, specialty chemical companies are expected to utilize their

internal accruals and modest debt to meet capex requirements. Companies in the sector are expected to generate strong

cash flows and maintain adequate liquidity and robust financial profiles. Higher-than-expected growth in demand, along

with stable feedstock availability at low prices and ability to comply with regulatory norms, would further strengthen

operating profile of the sector. However, sharp changes in oil prices (due to an un-favourable macroeconomic scenario),

uncertainty about feedstock procurement and an uptick in global capacity expansion could have a negative impact on the

sector.

Company believes exports will continue to clock faster growth than the domestic business. Given the pressure to

outsource manufacturing is high, due to environmental reasons and cost compulsions, the growth runway for the Indian


specialty chemicals industry may last another decade easily. By that time Indian consumption too would start dominating.

The high share of China in the chemicals supply chain is also making global players look for alternative supply sources.

Considering the above factors, the outlook for the current year looks bright, except for unfavorable impact, if any, on

account of rupee depreciation, weaker consumer sentiment or other unforeseen circumstances.


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The information and opinions in Firstcall Research was prepared by our analysts and it does not constitute an offer orsolicitation for the purchase or sale of any financial instrument including any companies scrips or this is not an officialconfirmation of any transaction. The information contained herein is from publicly available secondary sources and dataor other secondary sources believed to be reliable but we do not represent that it is accurate or complete and it should notbe relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damagethat may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/or its affiliates and/or employees will not be liable for the recipients’ investment decision based on this document.

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The following analysts hereby state that their views about the companies and sectors are on best effort basis to the best oftheir knowledge. Unless otherwise stated, the individuals listed on the cover page of this report are research analysts. Theanalyst qualifications, sectors covered and their exposure if any are tabulated hereunder:

Name of the Analyst Qualifications SectorsCovered

Exposure/Interest tocompany/sector UnderCoverage in the CurrentReport

Dr.C.V.S.L. Kameswari M.Sc, PGDCA,M.B.A,Ph.D (Finance)

Pharma &Diversified

No Interest/ Exposure

U. Janaki Rao M.B.A CapitalGoods


B. Anil Kumar M.B.A Auto, IT &FMCG


V. Harini Priya M.B.A Diversified No Interest/ ExposureB. Srikanth M.B.A Diversified No Interest/ Exposure

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tpl plastech ltd overweight isin: plastic products… · tpl plastech ltd result update (parent...

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