Tinplate Company of India: Buy for a target of Rs99

Keynotes Financial Opiniery | Jan. 5, 2017, midnight

The Tinplate Company of India Ltd. (TCIL), is in its 95th year, is aTATA 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. The company was incorporated in 1920 and the site chosen was Golmuri, Jamshedpur. TCIL is today the largest indigenous producer of tin coated and tin free steel sheets in India,enjoying 35-40% market share and undoubtedly the industry leader for more than 90 years. The company exports about 20-25% of its production directly to end-users (can-makers) and its products are well accepted in the markets of SE Asia, Middle East and some developed countries in Europe.

Headquartered in Kolkata, the Company’s Works is located at Jamshedpur, Jharkhand. There are presently 11 offices in India and a distribution network with 16 stocking points. TCIL thus almost single-handedly built up the Indian Tinplate Industry.

The Company is in the business of manufacturing and supplying reliable, cost-effective, value-added tin mill products. It manufactures various grades of electrolytic tinplates, tin-free steel sheets and Full Hard Cold Rolled Sheets (FHCR) used for metal packaging.

In pursuit of its downstream agenda, the company has been bonding with food processors and fillers by way of world class printing and lacquering facilities at the "Solution Centre".

Investment Rationale:

- Financial Performance: The gross revenue from operations of the Company for FY 2013-14 at Rs.1059 crores were higher by 20% compared to FY 2012-13 at Rs.877 crores on the strength of enhanced scale of operations and better realizations. The profit after tax has correspondingly increased to Rs.63 crores in FY 2013-14 from Rs.28 crores in FY 2012-13.

- Increase in Production: During the financial year 2013-14, the Company has achieved a 5% increase in production over the previous year and an overall capacity utilization of approx. 85%.

- Debt Amount Decreases: TCIL has significantly decreased the debt level by approx. 42% y-o-y, thereby decreasing the Debt-Equity ratio to 0.16.

- Strong market presence: Company was able to cross yet another milestone of 250,000 tons of sales in domestic market and a new high of 70,000 tons in export business. Going forward, higher levels of customer engagement and cost efficiencies will drive higher volumes and improve profitability.

- Enhancing competency: Tinplate has remained competitive mainly through progressive light-weighting. With the recent enhancement in capacity, your Company is better equipped to meet the growing demand for thinner tin mill products.


- Changes in input raw material (hot rolled coils and tin) prices not commensurate with tinplate prices would put serious pressure on margins. Volatility in foreign exchange rates creates uncertainties in managing exports.

- Post Free Trade Agreement with Japan, import of good quality prime tinplate has become cheaper with duty being just 3%, while dumping of non-prime tinplate from international mills continues to pose a problem as these tinplates find their way into food packaging industry.

- Domestic competition is intensifying with existing players getting more aggressive and new players entering the market. This will lead to reduction in margins in years to come unless growth takes place.

- Alternate packaging medium continues to pose a threat to the metal packaging industry.


On the basis of Discount Cash flow (DCF), we recommended buy for the stock. We have done a 2 stage Discount Cash flow analysis for arriving at the intrinsic value for this company. Based on these numbers, the present or discounted value of future cash flows for this company is coming at Rs.99 per share which is also the stock’s intrinsic value using the discount cash flow method.

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