TPL Plastech Ltd

CMP = 288

TPL Plastech Ltd (TPL) was incorporated in 1992 and its manufacturing operations commenced in 1995 at Silvassa plant. TPL offers a wide range of industrial rigid polymer packaging products like  drums and containers for various packaging requirements for almost every industrial sectors. Later on it started manufacturing infrastructure related products like HDPE pipes and  DWC pipes. TPL has six manufacturing plants, whose production capacities are 18,000 tons of drums and  10,000 tons of HDPE pipes.

TPL Plastech is the second largest manufacturer of bulk packaging drums in India with capacity to produce 1.8 million barrels per annum. Its promoter Time Technoplast is the largest producer of bulk industrial packaging in the world and it commands 75% market share in Indian market along with TPL Plastech.


TPL is the first manufacturers in bulk packaging to get an ISO certification for its unit at Silvassa as early as 1998.  Company products are complying with U/N Certified Quality Standards IS 6312.

These  barrels and  containers are used for packaging of various products like chemicals, paints, pigments, inks, pharmaceutical intermediates,  industrial coatings, agricultural, intermediates, construction chemicals, additives, lube oils, food and beverage etc.

In 2017, the company began the production of DWC pipes at Gadarpur unit. 87% of the turnover comes from the sales of drums and  13% sales  contributioms come from pipes division. The Company's PE pipes are used in applications, such as portable water services or distribution lines, sewerage and drainage, cable ducting, natural gas distribution, irrigation, waste disposal, industrial application and offshore pipeline installation. High Density Polyethylene (HDPE). Pipes processing ranging from 100 - 600 mm diameter at Pantnagar (Uttarakhand) to serve the northern region.

TPL plastech PE Pipes are capable of handling semi-solid & gaseous effluents and has unmatched resistance to corrosive chemicals. They are lighter, easy to handle & install compared to heavier metallic or concrete pipes. PE Pipes are 100% leak proof therefore they are preferred over galvanized, ductile iron, cement pipes for applications such as portable water services or distribution lines, sewerage & drainage, cable ducting, natural gas distribution, irrigation, waste disposal, industrial application & offshore pipeline installation.

TPL Plastech PE Pipes are made with quality assurance system and strict adherence to IS: 4984, IS: 14333, IS: 14151, ISO: 4427, DIN 8074 design and testing code to match the quality of our products and services.

Having established first unit in Silvassa way back in the year 1995 later commissioned units at Jammu (J & K), Gadarpur (Uttaranchal), Kutch (Gujarat) , Ratlam (Madhya Pradesh) and last but not least Vizag (A.P.)  to cater to major clients in Western, Northern, Central & South India. 

Growing steadily, TPL has became the 2nd largest manufacturer of drums in India, especially Bulk Packaging. TPL has a huge client base catering to more than 225 customers from different sector of industry.

Investment Rationale

Time Technoplast Ltd. (TTL) acquired 75% equity stake in its next competitor TPL Plastech in 2006. Post acquisition TPL became a Time Group company, enabling access to latest technology platform for polymer processing and product development. It has enabled this small company to grow exponentially after acquisition in 2006 with following progress details.

• Addition of jerry cans with 20 - 120 ltr capacity (2008)
• Started production facility in Jammu (2010)
• Started production facility in Pantnagar (Uttarakhand) (2010)
• Started production facility in Bhuj (Gujarat) (2012)
• Got listed on NSE (2015)
• Started production facility in Ratlam (M.P.) (2015)
• Started Production of DWC Pipes in Gadarpur (2017)
• Started production facility at Vizag (A.P.) 2018

* Total Income growth 10 Year (Post Acquisition by TTL ) CAGR 15.58%

* EBITDA growth 10 Year (Post Acquisition by TTL ) CAGR 17.44%

* PAT  growth 10 Year (Post Acquisition by TTL ) CAGR 20.07%

The Company has started manufacturing of high pressure HDPE pipes and DWC pipes for meeting growing requirements in the infrastructure business segment comprising of water supply management, irrigation, sewerage & drainage systems, effluent / sewerage treatment plants, destination, offshore & industrial piping, telecom & power cable ducting etc, confirming to National & International standards at Gadarpur, (Uttarakhand).

The demand for polymer drums, HDPE and DWC pipes are increasing steadily and the company has increased capacities to sufficient levels. Last year company has expanded its manufacturing capacity at existing locations in industrial packaging and DWC Pipes by 30%, sales revenue and profit will gradually increase in future without addition of major capex in next 2 years.

Over the years polymer drums are substituting metal drums in industrial applications such as packaging of chemicals. They have several advantages over conventional mild steel drums because of their better resistance to chemicals, lesser weight and are more cost effective.The industrial packaging market in India is growing at a rate of 15-20% per annum. Shift in industrial packaging from steel drums to polymer drums augers well for growth of TPL Plastech because it dominate along with its parent Time Technoplast in the Indian industrial packaging segment with more than 75% market share.

HDPE and DWC pipes  are fast replacing conventional pipes like ductile iron, mild steel and cast iron pipes in water supply, irrigation, sewage & effluent treatment, desalination plants etc. This is mainly due to their properties like anti-corrosive, leak proof, light weight, cost effective, low service cost and longer life. Even HDPE material is sturdier, more abrasive-friendly and has higher resistance to wear & tear and heat compared to PVC.

Demand for HDPE and DWC pipes will remain strong in irrigation, infra and construction sectors due to launch of several government  project like Swachh Bharat Mission, 100 Smart Cities and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) aim to further expand the sewerage network and treatment capacity. The government is taking a number of steps to improve the country’s sewage treatment infrastructure.

Plastics plays a major role in water management and scores over alternate competitive materials. The Indian plastics pipes market is forecasted to grow at 10.4% CAGR up to 2021. The domestic per capita consumption of polymers at 9 kg is one of the lowest compared to the global average of 25 kg, it gives enough head room for rapid growth.

TPL enjoys strong operational and product support from its parent. It gives easy access to latest technology, raw material sourcing, integrating and upgrading its operations for cost reduction and alternate supplier to customers.

Conclusion

TPL Plastech is well established name in the bulk packaging and new business segment  of HDPE and DWC pipes is also expected to grow at rate of 15-20% per annum for next 4 -5 years. After acquisition by TTL in 2006 company has expanded its foot print across the major industrial hubs of country with addition of 5 new manufacturing plants at different locations. All above factors are very positive for this small cap company. 

Recent market correction was very severe on several small cap stocks even with very strong fundamental, TPL corrected more than 70% without any change in fundamental of the company. Today Sensex and Nifty closing at record  high and TPL Plastech closed 8% up at Rs 288,  it  is very good investment opportunity at cmp for both short  term and long term ( 1 year to 4 years ). It can be bought + / - 10% from cmp with 10-20 % of portfolio allocation.