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SHARETIPSINFO >>Research Reports >>TAMIL NADU NEWSPRINT AND PAPER LTD(12-08-2009)

 

LISTING
CMP

Rs 78

52 WEEK HIGH/LOW
Rs98/Rs50
FACE VALUE
Rs10
PE RATIO

5

AVERAGE VOLUME

82438

MARKETCAP

Rs520 crore

P/BV
0.9

COMPANY OVERVIEW:
Tamil Nadu Newsprint and Paper Limited (TNPL) was established by the Government of Tamil Nadu in the early eighties. The company produces Newsprint and writing paper using the bagasse, a sugarcane residue. TNPL commenced production in the year 1984.
TNPL has the production capacity of 2, 45,000 tons of paper per annum. Company is planning to increase the production capacity to 4, 00,000 tons per annum by July2010. Over the years company has emerged as the largest bagasse based paper mill in the world.
TNPL exports around 20% of the total production.


Product:
TNPL Ultra White Map litho
TNPL Elegant Map litho
Hi-Tech Map litho
TNPL Map litho
Radiant Printing
Commander
Hardbound Notebook
TNPL offset Printing
Cream wove
Copy Crown
TNPL Copier
Student’s Favourites
Super Print Map litho

PAPER INDUSTRY:
The Indian Paper Industry ranks 15th among the global producers. The Industry is fragmented with over 600 units with capacity ranging from 3 to 700 TPD based on virgin pulp, agro waste and recycled fibre. This has resulted in a very heterogeneous and competitive market. In an industry facing acute raw material scarcity, high energy demands and changing customer requirements for quality, TNPL enjoys 10% share in the Indian printing and writing paper market.


KEY INVESTMENT RATIONAL:
Despite the fall in PBDITA by 21.7 in Q1FY2010 PBDITA margin has improved by healthy 200bp.
Company expansion plan is intact. The capacity is expected to increase by 70% by 2010.
The stock is trading below its book value.
Paper demand is expected to increase in second half of FY2010.
Price of paper is also expected to remain firm in the coming quarter.
TNPL being a bagasse based plant is relatively insulated from the volatility in the price of imported pulp. It has entered in to long term contract with sugar companies, wherein bagasse is procured in exchange of supply of process steam and power.

SHAREHOLDING PATTERN:

 

 

NO. OF SHARES

% OF TOTAL

PROMOTER

24444900

 

35.32%

 

INSTITUTION

27224963

 

39.34%

 

GENERAL PUBLIC

17540737

 

25.34%

 

GRAND TOTAL

69210600

 

100.00%

 

FINANCIAL:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

TOTAL INCOME

801.41

880.4

969.66

1100.3

EXPENDITURE

-612.08

-665.85

-706.66

-796.94

PBDITA

 

189.33

214.55

263

303.36

DEPRECIATION

-62.5

-66.73

-75.54

-100.8

PBIT

 

126.83

147.82

187.46

202.56

INTEREST

 

-20.29

-20.52

-24.25

-63.25

PBT

 

106.54

127.3

163.21

139.31

TAX

 

-23.65

-38.97

-50.23

-49.95

EXTRA ORD ITEM

-5.07

-2.27

0

18.02

PAT

 

77.82

86.06

112.98

107.38

KEY HIGHLIGHTS:
Total Income has grown over the last four years at CAGR of 11.5%.
PBDITA has grown over the last four years at CAGR of 17%.
PAT has grown over the last four years at CAGR of 11.6%.


RATIOS:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

EPS

 

11.24566

12.43642

16.32659

15.51734

PBDITA MARGIN

23.62461

24.3696

27.12291

27.57066

NPM

 

9.710385

9.775102

11.65151

9.759157

INTEREST COVER

6.247783

7.210732

7.651429

3.20253

KEY HIGHLIGHTS:
EPS has crown at CAGR of 11.6%. The decline in EPS in FY2009 as compared to FY2008 by Rs 1.2 is due to the decline in top line. The tight market condition was responsible.
PBDITA margin has shown good upward trend. It has improved over the years from 23.6% to 27.5%. Even in tight condition last year margin has shown improvement.
NPM remained almost flat over the year.
Interest cover has shown significant decline from 6.2 to 3.2 due to the higher interest outgo. The increase in debt for capex is the main reason.


COMPARISION OF Q1FY2010 WITH Q1FY2009:

 

 

Q1FY2009

%CHANGE

Q1FY2010

TOTAL INCOME

254.97

-28%

 

183.66

EXPENDITURE

-189.35

 

 

-132.3

PBDITA

 

65.62

-21.70%

 

51.36

DEPRECIATION

-22.27

 

 

-26.84

PBIT

 

43.35

 

 

24.52

INTEREST

 

-9.03

 

 

-13.65

PBT

 

34.32

 

 

10.87

TAX

 

-9.7

 

 

-3.74

PAT

 

24.62

-71%

 

7.13

KEY HIGHLIGHTS:
Weaker paper demand affected the top line and bottom line.
Total income declined by 28%.
PBDITA decline by 21.7%. However PBDITA margin improved from 25.7% to 28%.
Net Profit declined by 71%.

VALUATION&OUTLOOK:
At Cmp of Rs78 the stock is trading at 5.03X FY2009 earning and 4.1X FY2010E earning. We expect FY2010E EPS to be Rs19. The average PE for the company is 6X. So the fair price we arrive at is Rs114.

CONCLUSION:
The stock is low risk counter. All the negative news has been discounted on in the price. Investor should accumulate stock at current level. The investment period is nine month.

 

 

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