TINPLATE (CMP 64)

ABOUT THE COMPANY
Tinplate a Tata group company, is today the largest indigenous producer of tin coated and tin free steel sheets in India, enjoying 33% market share and the industry leader for 85 years. The company exports about 20-25% of its production directly to end-users and its products are well accepted in the markets of SE Asia, Middle East and some developed countries in Europe.

TINPLATE is a Kolkata based company with its factory located at Jamshedpur in Jharkhand.and distribution network with 17 stocking points.

USES OF TINPLATE

The largest application of tinplate is in packaging and it is ideally suited for this purpose, by virtue of it being non-toxic, light in weight, strong, corrosion resistant and easily formed, soldered and welded; it also provides an excellent printing surface. The tin coating has a low melting point, possesses lubricant qualities and imparts a good appearance. Cans made from tinplate are easy to handle, dispose and store. Tinplate is primarily used for packaging foodstuffs and beverages, but it is also used in containers for oils, grease, paints, powdered, polishes, waxes, chemicals and many other products. Aerosol containers and caps and closures are also made from tinplate.


FINANCIALS

YEAR                          MARCH07       MARCH08       MARCH09      SEP09(6months)
SALES                          454                  399                   660                  354
NET PROFITS               18                    3.9                   34.8                  37
EQUITY CAPITAL IS 28.92 CRORES.

RECENTLY COMPANY HAS COMPLETED RIGHTS ISSUE AT RS 45 PER SHARE IN THE RATIO OF 3 SHARES FOR EVERY 2 SHARES HELD AND ALLOTTED FCD OF RS PAYING AN INTEREST OF 3% AND CONVERTIBLE INTO EQUITY SHARES IN THE RATIO OF 5 FCD FOR EVERY 8 SHARES HELD. THE FCD WILL BE CONVERTED INTO EQUITY SHARES ON 1 APRIL 2011 AT A PRICE OF 55 PER SHARE.
AFTER THIS EQUITY DILUTION, THE TOTAL EQUITY IS EXPECTED TO BE AROUND 72 CRORES .

TOTAL DEBT AS ON MARCH 09 IS AROUND 271 crores and total market cap is around 450 crores at cmp 64.


EXPANSION

TINPLATE has expanded its tinning line by 200,000 tonne per annum from the current 179,000 Tonnes per annum, which takes its total tinning capacity to 379,000 Tonnes. It is also in process of expanding its Cold Rolling Mill capacity by similar levels to ensure self sufficiency in raw materials for the tinning line expansion.

DEMAND FOR TINPLATE LIKELY TO RISE

Because of changing demographic profile, increased use of canned foods
Low consumption of tinplate in india of 0.4kg/capita as compared to 1kg/capita in china and 8-10 kg/capita in many developed countries.
Tinplate is an eco-friendly material and hence would be preferred for packaging.

THE DEMAND FOR PRODUCTS OF THE COMPANY ARE LIKELY TO WITNESS VERY GOOD GROWTH AND WITH INCREASED CAPACITY IN PLACE, AND FINANCING ALSO DONE BY RIGHTS ISSUE, COMPANY SHOULD BE ABLE TO SHOW GOOD GROWTH IN SALES AND PROFITS GOING FORWARD.

TECHNICALS

THE STOCK HAS BROKEN OUT OF AN INVERTED HEAD AND SHOULDER PATTERN ON A TIME FRAME OF AROUND 18 MONTHS AND CURRENTLY CONSOLIDATING ABOVE ITS NECKLINE AT AROUND 60. TARGETS FOR THIS BREAKOUT IN THE MEDIUM TERM COULD BE AROUND 90 – 100.
ON DAILY CHARTS THE STOCK SEEMS TO BE FACING SOME RESISTANCE AT 65 AND HAS SUPPORT IN THE RANGE OF 55-60.


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