TPPL proposes to diversify business operations by manufacturing woven sacks and injection mouldings. It plans to increase its present capacity in PVC pipes from 25,094 Mt to 46,468 Mt by 2011–12. Expand customer base with increase geographical reach.
Strengths - Strong client relationship, Marketing and distribution network, Diversified customer base & product mix.
Concerns - Low Capacity utilisation, Concentrated revenue stream, Dependency of dealer’ network
Motilal Oswal Analyst Anoop Tulsyan asks investors to
AVOID the public issue of Texmo Pipes and Products with the following views,
During FY06 to FY09, TPPL’s Revenue, EBITDA & Net Profit has grown at compounded growth rate of 43%, 91% & 101% respectively. However, at upper band of Rs. 90 per share, the company will trade at 16x FY11 E earnings. The peer group companies in this segment; i.e. Tulsi Extrusion and Kisan Mouldings are available at 3.4x & 12x FY10 E Earnings respectively, which is at discount to TPPL’s valuation. We, therefore recommend clients to avoid the issue.
