A lesser-known Tata Group company—Tinplate Company of India Ltd (NS:
) released its earnings for the quarter ended September 30 on November 15 after market hours. The company is a subsidiary of Tata Steel (NS:
) Ltd. Tinplate stock rallied 3.64% in the last five days in anticipation of strong quarterly results. Yesterday, the scrip was up almost 1% to close at Rs 310. The share has more than doubled in a year and returned a handsome 85.6% year-to-date. In six months, it gained 44.45%, however, declined 7.5% in a month.
Second-quarter revenue and growth
In the second quarter, Tinplate Company’s sales were Rs 885.66 crore, up 80.4% compared to Rs 490.99 crore in the second quarter of fiscal 2021. The company’s other operating income was Rs 91.16 crore, up 125% as against Rs 40.49 crore in Q2FY2022. Total revenue from operations stood at Rs 976.82 crore in the quarter from Rs 531.48 crore in the second quarter of fiscal 2021. It translates into a year-on-year growth of 83.8%. Revenue from operations more than doubled to Rs 1,843.12 crore in the first six months of fiscal 2022 compared to Rs 911.25 crore in the corresponding period of FY2021.
The Indian domestic market has few tinplate manufacturers, which gives strong bargaining power to Tinplate. Around 70% of domestic Tinplate is consumed in the packaging of edible oil and processed food items. The processed food industry is snowballing, riding on the modern retail and e-commerce industry growth. The Government of India has also allowed 100% FDI in the food processing industry. It is most likely to benefit Tinplate as its growth is directly linked with these industries.
In the last three years, TCIL’s revenue CAGR remained 6% significantly lower than 22% last five years. The same was 11% for a 10-year period.
Second-quarter net profit and growth
Total expenses in the quarter were Rs 886.93 crore, up 71.6% year-on-year as against Rs 516.77 crore in Q2FY2021. Profit before tax was Rs 99.99 crore in the quarter, up 395% compared to Rs 20.17 crore in Q2 of fiscal 2021. Net profit for the period was Rs 74.93 crore as against Rs 16.07 crore in the second quarter of fiscal 2021. It translates into a year-on-year rise of 366.3%. The stock’s earnings stood at Rs 7.16 per share in Q2FY2022, up 365% from Rs 1.54 in the second quarter of fiscal 2021. Tinplate’s net profit CAGR remained at 10% for a period of 3-year, 8% for a 5-year period, and 11% for a 10-year period.
A cash flow statement gives a good idea about the cash position of a company. TCIL’s net cash flow from operating activities was Rs 36.55 crore in the first six months of fiscal 2022 compared to Rs 138.07 crore in the first six months of fiscal 2021.
Shareholding in September 2021 quarter
While promoters’ holding remained unchanged at 74.96% in the September 2021 quarter, FIIs/FPIs stake marginally went up from 2.42% in June 2021 quarter to 2.61% in the September quarter. Institutional investors too raised their holdings by 0.19% in the September quarter.
Based on key technical parameters such as RSI, momentum, and 20-day/50-day/100-day/200-day EMA the scrip looks favorable.
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