Dolly Khanna, Vijay Kedia & Anil Kumar Goel Form ‘Mahagathbandhan’ To Aggressively Buy Micro Cap Stock

TCPL Packaging came to our attention in the December 2014 quarter when we noticed that Vijay Kedia had bought 95,053 shares.

After that, Vijay Kedia has added a further 24,908 shares. His holding as of 30.06.2015 stands at 119,961 shares. The holding is worth Rs. 6.62 crore at the CMP of Rs. 552.

Now, the significant news is that Dolly Khanna, our favourite stock wizard, has decided to join Vijay Kedia in TCPL Packaging. She has scooped up a chunk of 28,892 shares during the year ended 31.03.2015. Her purchases are as follows:

Dolly Khanna’s holding as 30.06.2015 is not known. Her holding of 28,892 shares is worth Rs. 1.60 crore.

Anil Kumar Goel is the third whiz-kid who is aggressively buying TCPL Packaging. He started the year with a huge chunk of 540,001 shares and ended the year with a holding of 720,571 shares. Anil Kumar Goel’s purchase details are as follows:

The best part is that Anil Kumar Goel’s aggressive buying has continued even after that. As of 30.06.2015, he has 741,000 shares to his credit. The holding is worth Rs. 41 crore at the CMP of Rs. 552.

Two things are quite evident from the buying action of the wizards. The first is that all three wizards are privy to some knowledge that has made them super-bullish about TCPL Packaging. The second is that the wizards are being careful to do their buying in installments so as to keep their action as quiet as possible.

The reason for the bullishness of the wizards is quite evident when you consider the financial performance of TCPL Packaging for the year ended 31.03.2015. The turnover increased by 25.45% from Rs. 412.44 crore to Rs. 517.40 crore. The EBIDTA increased to Rs. 82.00 crore from Rs. 61.18 crore during the previous year, an increase of 34.03%. The Cash profit surged from Rs. 64.71 crore in FY 2014-15 as against Rs. 43.52 crore in FY 2013-14.

The track record of the past five years is also quite encouraging. The sales have grown at a CAGR of about 21% while the profit has grown at a CAGR of 48%. The ROE is also quite high at about 19%.

At the CMP of Rs. 552, TCPL Packaging is quoting at a P/E of about 14x and offers a dividend yield of about 1%. This is quite reasonable when you consider the consistent track record of the company.

TCPL Packaging also has a track record of paying generous dividends. The dividend payout is retained at close to 19% of the net profits.

The annual report also paints a rosy picture of the future outlook for the company. It states that there is an improvement in the FMCG and other sectors where the Company supplies the packaging material. It is also stated that with inflation stabilising, it is expected that the country will return to the high growth rates seen in the past and that this will translate into higher rates of industry growth for consumption in the future, which will auger well for TCPL’s prospects.

Also, according to a report in printweek.in, the market for labels is worth a whopping Rs. 3000 crore. A reference is made to the fact that TCPL has launched its Guwahati operation with investment in the latest infrastructure and equipment.

In an interview to printweek.in, Saket Kanoria, the MD, revealed that the FMCG industry is growing at about 10-12% volume-wise and that the company is also picking up market share. This has helped the company to grow at about 17-18% consistently over the past years. He also added that the huge capex investment required to set up a plant and also the geographical proximity to the customers required created some sort of an entry barrier for competitors.

So, it does look like the three wizards have picked yet another winner stock for themselves.