21st October, 2009 

 
The Tinplate company of India Limited
Market Performer ; BUY

Company Info INVESTMENT RATIONALE

CMP(Rs) 66.5
Target Price (Rs) 80 Company is a market leader in the industry
The company enjoys a 1/3 market share in India. Of its total sales 25-
Sector Non Ferrous
30% is contributed by exports. In FY09 with second tinning line of
52 week H/L 81.8/18.2
200,000 tpa, company became the largest tinplate producer in South
BSE Code 504966 East/ West Asia.
NSE Code TINPLATE
Face Value(RS) 10 Packaging Industry offers huge growth potential:
Market Cap(Rs) 479 Tinplate is a downstream steel product & is ideally suited for packaging
processed edibles; approx 65-70% of global tinplate consumption is
from food & beverages. Packaging industry growth is dependent on the
Price Performance rate of economic growth of a country. Consumption of tinplate in India is
% 1m 3m 1yr approx 0.3-0.4 kg / capita which is much lower as compared to 8-12 kg
Absolute 10.0% 80.3% 270.3% / capita in many developed nations and 1 kg /capita for China. With the
Relative to economic growth packaging industry is also poised for growth, hence the
26.1% 57.7% 129.7%
Sensex demand for tinplate is also expected grow.

Shareholding Pattern (%) Canned beer is evolving in a big way in to India with changing
Promoters 32.34
demographic profile of country. Youngsters are preferring cans over
bottles. For India’s largest beer manufacturer, United Breweries canned
FII / Institutions 10.14
beer used to account for just about 2% of total beer volumes 3 years
Public & Others 57.52 ago, but now it has gone up to 10% and company is expecting it to grow
to 20% in the near future.

Company is enhancing competency:

The company has taken series of strategic steps for growth & technology
improvement to cater to growing needs of the packaging industry. In
FY09 the company commissioned its second tinning line in October
2008, taking the total capacity to 379000 tones per annum of
electrolytic tinplates & tin free steel. In order to ensure self sufficiency in
raw materials for its second tinning line the company is setting up a
second cold rolling mil. This mill is expected to be commissioned in
2010. With the commissioning of this facility the company will have
complete backward integration in terms of raw materials for both of its
tinning lines.

Key Developments
The company has recently issued Rights in the ratio of 3 equity shares
for 2 shares held, each share issued at Rs.45 per share. Along with the
rights company has also issued fully convertible debentures of FV Rs.100
paying an interest of 3%. These FCD’s will be converted on 1st April
2011 into 20 equity shares of Rs.45 each.
The company is in process of investing Rs.650 crore in tinning line &
cold rolling mill (CRM). Company has already invested Rs.200 crore in
the tinning line & is in process of investing Rs.450 crore in CRM.

Valuations
At current price of Rs 66.5 the stock is trading at P/E of 7.1 x of FY10E
EPS of Rs.9.4 and it is trading at TTM EV/EBITDA of 3.9x.

We recommend a “BUY” on the stock with a 12 month target price of

Rs.80.

KRC RESEARCH 1
 The Tinplate company of India

21st October 2009

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Kisan Ratilal Choksey Shares and Securities Pvt. Ltd.

1102, Stock Exchange Tower, Dalal Street, Mumbai 400 001. Members: BSE & NSE
Head-Off Phone : 91-22-66535000 Fax : 66338060 www.krchoksey.com
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KRC RESEARCH 2