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KRC RESEARCH 1

21st October, 2009The Tinplate company of India Limited

Market P erformer ; BUY

Company Info

CMP(Rs) 66.5

Target Price (Rs) 80

Sector Non Ferrous

52 week H/ L 81.8/18.2

BSE Code 504966

NSE Code TINPLATE

Face Value(RS) 10

Market Cap(Rs) 479

Price Performance% 1m 3m 1yr

Absolute 10.0% 80.3% 270.3%

Relative toSensex

26.1% 57.7% 129.7%

Shareholding Pattern (% )

Promoters 32.34

FII / Institutions 10.14

Public & Others 57.52

INVESTMENT RATIONALE

Company is a market leader in the industryThe company enjoys a 1/3 market share in India. Of its total sales 25-30% is contributed by exports. In FY09 with second tinning line of200,000 tpa, company became the largest tinplate producer in SouthEast/ West Asia.

Packaging Industry offers huge grow th potential:Tinplate is a downstream steel product & is ideally suited for packagingprocessed edibles; approx 65-70% of global tinplate consumption isfrom food & beverages. Packaging industry growth is dependent on the

rate of economic growth of a country. Consumption of tinplate in India isapprox 0.3-0.4 kg / capita which is much lower as compared to 8-12 kg/ capita in many developed nations and 1 kg /capita for China. With theeconomic growth packaging industry is also poised for growth, hence thedemand for tinplate is also expected grow.

Canned beer is evolving in a big way in to India with changingdemographic profile of country. Youngsters are preferring cans overbottles. For Indias largest beer manufacturer, United Breweries cannedbeer used to account for just about 2% of total beer volumes 3 yearsago, but now it has gone up to 10% and company is expecting it to growto 20% in the near future.

Company is enhancing competency:The company has taken series of strategic steps for growth & technology

improvement to cater to growing needs of the packaging industry. InFY09 the company commissioned its second tinning line in October2008, taking the total capacity to 379000 tones per annum ofelectrolytic tinplates & tin free steel. In order to ensure self sufficiency inraw materials for its second tinning line the company is setting up asecond cold rolling mil. This mill is expected to be commissioned in2010. With the commissioning of this facility the company will havecomplete backward integration in terms of raw materials for both of itstinning lines.

Key DevelopmentsThe company has recently issued Rights in the ratio of 3 equity sharesfor 2 shares held, each share issued at Rs.45 per share. Along with therights company has also issued fully convertible debentures of FV Rs.100paying an interest of 3%. These FCDs will be converted on 1st April2011 into 20 equity shares of Rs.45 each.The company is in process of investing Rs.650 crore in tinning line &cold rolling mill (CRM). Company has already invested Rs.200 crore inthe tinning line & is in process of investing Rs.450 crore in CRM.

ValuationsAt current price of Rs 66.5 the stock is trading at P/E of 7.1 x of FY10EEPS of Rs.9.4 and it is trading at TTM EV/EBITDA of 3.9x.

We recommend a BUY on the stock with a 12 month target price ofRs.80.

8/14/2019 Enhance Competency

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The Tinplate company of India

21 st October 2009

KRC RESEARCH 2

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