NOT A BUY RECOMMENDATION
TNPL CMP 112 View:
TNPL was promoted by the Government of Tamil Nadu (GoTN) . GoTN is currently the single largest shareholder with a stake of 35.3% stake. TNPL has a production capacity of 400,000 tpa at its plant at Pugalur in Kagithapuram (TN), which is the largest single location paper plant in India. The company possesses manufacturing capability for both newsprint and WPP; however, because of better cost economics, TNPL has been manufacturing only WPP.
TNPL is the second largest player in the domestic WPP segment, with an installed capacity of 400,000 tonne per annum (tpa). Despite intense competition, the company has sustained its strong market position backed by its established brand, diversified product portfolio and customer base, robust distribution network and regular capacity expansions
TNPL's operating margins in WPP are among the highest in the industry owing to strong efficiencies arising out of backward integration, long-term supply tie-ups and captive power plant. The company is undertaking a large capex of Rs 2,520 Cr. Phase I involves a capex of Rs 1100 crore towards expansion of its pulp capacity by 140,000 tonnes per annum (tpa) and is being implemented between fiscal 2020 and 2022. Capex in phase II will be Rs 1420 crore towards setting up new WPP capacity of 165,000 tpa with additional captive pulp capacity and will be implemented between fiscals 2022 and 2024 (post commencement of phase I).
Strong dividend player at the CMP 112 dividend rate is around 6% of the CMP although it was down as compare to previous year and it was around INR 7.5 per share. Borrowing cost is also declining on QoQ.
Share has strong support at 98. Current Position: Hold, above 115 should be good to go with 122/128 target in short term.
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TNPL was promoted by the Government of Tamil Nadu (GoTN) . GoTN is currently the single largest shareholder with a stake of 35.3% stake. TNPL has a production capacity of 400,000 tpa at its plant at Pugalur in K......read more
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