IGI Logo

Focus on new segments to drive future growth…

We met the management of TCPL Packaging (TCPL) to get an insight into its business and future plans.​​​​​​​ TCPL is one of the leading players among the paperboard–based packaging solutions providers in India. It also entered the flexible packaging solutions in FY17 to drive revenue growth and leverage its established folding cartons customer base. In December 2021, the company acquired majority stake in rigid box manufacturer ‘COPPL’ to venture into rigid box manufacturing.

* Revenue, earnings grew at CAGR of 9%, 19%, respectively, in FY18-21

* It sees ~2x revenues in the non-paperboard packaging business (~15% of revenue in FY21) supported by capacity expansion and client additions

Management meet highlights:

* The FMCG industry contributes ~50% to TCPL’s overall revenue. It also has customers in food & beverages, pharma, liquor and tobacco segments

* The company entered the flexible packaging business in FY17 to leverage its established customer base and drive revenue growth. Flexible packaging revenue contributes ~15% of the company’s total revenue and has grown to ~4x in the last four years

* TCPL has invested ~| 20 crore to acquire a majority stake in Noida based COPPL in Q3FY22. COPPL is one of the leading rigid box packaging solutions providers to mobile companies in India

* The company incurred a capex of | 110 crore to double the capacity of the flexible packaging business and set up a polyethylene (PE) blown film line towards sustainable/recyclable products

* TCPL has commissioned a new plant to provide sustsainable and recyclable flexible packaging solutions to its clients, which will help the company double its segment revenue

* The flexbile packaging business has high asset turnover ~2x asset turn compared to ~1.2-1.5x asset turn of the folding carton business

* The company is able to pass on raw material cost with a lag of a month. Hence, the management sees annual EBITDA margin in range of 13-15%

* TCPL has guided for improvement in the working capital cycle (targets 60 days over the next two years vs. ~85 days in FY21) and lower capex, going forward, to aid in a reduction in debt/equity ratios

TCPL’s standalone revenue grew at 9% CAGR during FY18-21 led by 57% growth in the flexible packaging business. PAT grew at a CAGR of 19% during the same period led by ~250 bps expansion in EBITDA margin. The higher EBITDA margin is attributable to improved product mix and positive operating leverage from the flexible packaging business.

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer