Categories Analysis, Research Summary

TCPL Packaging: COPPL’s Acquisition & Developments In Flexible Packaging Segment

TCPL Packaging Limited (NSE: TCPLPACK) is a market leader of India’s flexible packaging industry. The company currently operates 8 manufacturing facilities across 5 locations, has marketing offices in major cities. The combination of creative solutions and cutting-edge technology has accelerated the company’s growth. The Folding Carton Division of TCPL provides a wide range of innovative, sustainable, and distinctive packaging solutions to meet the needs of different customers. The other division, Flexible Packaging, offers adaptable and environmentally friendly products to clients in a variety of industry verticals, including Pouches, Laminates, Shrink Sleeves, and Wrap Around Labels. The company’s customers are from Consumer Goods, Food Beverage, Tobacco, Liquor, Agro Chemicals, Pharma, and various other industries.

Recent Share Price Insights

  • On November 21, 2022, the stock price closed at ₹1,644, reaching closer to a 52-week high of ₹1,709.
  • Over the last six months, the stock has rallied by almost 107% and over the past year, it has jumped by 228%.
  • The share price saw a jump of more than 10% on 18th November due to healthy business outlook.

TCPL Packaging’s Financial Performance in Q2 FY23

TCPL Packaging Limited reported Revenue from Operations of ₹354.56 Crore up from ₹247.72 Crore year on year, a growth of 43%. Consolidated Net Profit of ₹39.51 Crore, up 272.7% from ₹10.6 Crore in the same quarter of the previous year. Net Profit Margin expanded by 674 bps up to 10.9%. The Earnings per Share is ₹43.43 for this quarter.

Recent Highlights

After concluding the acquisition deal at 6.98 Crore for 60%, the company became Creative Offset Printers Private Limited’s (COPPL) majority shareholder. COPPL is a segment of rigid boxes with high potential that caters to several rapidly expanding end-user electronics industries.

The management commented, “This acquisition is in line with our growth through diversification strategy, and strengthens our long-term growth prospects. Since the acquisition, we have been able to expand our product portfolio by onboarding a number of well-known brands in the electronics industry, including smartphones, smartwatches, headphones etc.”

Developments in Flexible Packaging Segment

The management believes the flexible packaging segment has some good potential for future growth. So, this segment’s capacity was greatly expanded in March, April this year and therefore the utilization has been on the lower. As a result, TPCL is gradually increasing Flexible Packaging utilisation levels in order to achieve optimal volumes over the coming quarters. Additionally, the company’s wholly owned subsidiary, TCPL Innofilms, which produces packaging film made from a single polymer that is recyclable and environmentally friendly, is receiving a lot of interest from players around the world. So, the company sees a good export potential in this segment.

Flexible packaging has an EBITDA margin of 10%, making it a lower margin industry. The company does, however, work to increase its margin because it deals with a lot of specialty materials. This segment should grow as a result of the company’s improved export and margin expansion efforts.

Packaging Industry Outlook

According to Modor Intelligence, the Indian packaging market is anticipated to experience a CAGR of 12.60% from 2022 to 2027. It is one of the fastest-growing industries in the country. The market is expanding quickly due to significant investments made in the pharmaceutical, personal care, and food processing sectors. According to the Indian Institute of Packaging (IIP), India’s per-person annual consumption of packaging has increased by 200% in the last 10 years, from 4.3 kilogramme per person per annum to 8.6 kg pppa. This increased consumption is due to the rising population, rising income levels, changing lifestyles, increased media penetration through the internet and television, and a growing economy. Government’s support in the forms of low taxes, subsidies, grants, loans are also encouraging the development in this segment.

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