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Environment Friendly Growth

TCPL Packaging Ltd (TCPL) prides itself on itstrack record of consistent growth (17.7%) over the last 15 years. It is also one among the 105 listed companies out of over 6000 that have shown growth every year for the last 10 years. Today TCPL is one of India’s largest manufacturers of folding cartons and standalone converter of paperboards. It is also a preferred sustainable packaging solutions provider having marquee clients across industries. Amidst the global thrust on sustainability, there is a shift towards paperboard based packaging and sustainable laminates.

The global sustainable packaging market is forecasted to grow at a CAGR of 6.7% from USD 281 bn to USD 469 bn. This is expected to trigger another leg of high growth for the industry. Consolidation of capacities in favour of environmentally friendly technologies is expected to lower competition. Being one of the larger players with better technology and know-how, the company is well poised to take advantage of this technology transition waiting to happen in the next 10-15 years.

Commissioning of the second manufacturing line in FY22 is expected to double the Flexible Packaging capacity. This segment is expected to be the growth driver over the period FY21-24. Revenue from this vertical is expected to grow by 34.5% CAGR to INR 324 cr in FY24 improving the revenue contribution by 800 bps to 23%. Shift from non-recyclable multi-polymer solutions to using recyclable mono-polymers is a mega trend in the offing.

In its subsidiary TCPL Innofilms, the setting up of a polyethylene blown film line are baby steps in this direction. The output finds application not only in-house but also has huge commercial potential. We value TCPL at INR 961 (14X FY24 earnings) and initiate coverage with a BUY. At the CMP of Rs 530.3 the price objective represents a potential upside of 81.2% over the next 18-24 months

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