InCred Capital has initiated coverage on TCPL Packaging (TCPL) with an “Add” rating and a target price of ₹4,250 per share. TCPL, a key player in the packaging industry, is known for its wide array of products across the flexible and folding carton categories, catering to multiple industries such as FMCG, tobacco, liquor, electronics, and others. Notably, the FMCG & Food and Beverage (F&B) segments make up around 55-60% of TCPL’s total revenue.
Key Rationale for the Rating
- Strong Customer Onboarding and Wallet Share Growth: TCPL has demonstrated strong capabilities in attracting large clients and enhancing its wallet share with existing customers, indicating a reliable business model and growth potential.
- Capacity Expansion Initiatives: The company has been making concerted efforts to expand its production capacity, which is expected to support sustained revenue growth over the medium to long term.
- Sustainable Packaging Demand: With increasing demand for sustainable packaging solutions, particularly in the FMCG industry, TCPL’s subsidiary, TCPL Innofilms, is well-placed to capitalize on this trend. This push is expected to significantly contribute to the company’s revenue growth.
- Innovations by TCPL Innofilms: The subsidiary is piloting several recyclable packaging solutions for major FMCG clients, positioning TCPL to tap into the growing market for eco-friendly packaging materials.
Financial Outlook
- InCred Capital expects 12% sales CAGR and a 20% EPS CAGR over the financial years FY24-FY27F.
- A projected 115 basis point expansion in EBITDA margins is anticipated over the same period, reflecting improved profitability driven by efficient operations and revenue growth.
With a diversified client base and strong growth in sustainable packaging solutions, TCPL Packaging’s future outlook appears positive as the company continues to expand its product offerings and capitalize on the growing need for sustainable packaging across multiple industries.
TOPICS:
TCPL Packaging