Good question.
According to me, the trend is structural, shift to tinplate packaging. It’s not a huge growth one as the industry is expected to grow at a 4-6% CAGR, but it’s an imminent trend. Look at the recent threat to ₹10 beverage packs due to plastic straw ban.
However, the market still perceives it as a cyclical, commodity play, and rightly so, as:
- The company seems to be strongly linked with Tata Steel, it’s parent. Tata Steel we know is purely cyclical.
- It’s dependence on raw materials is concerning. It’s basically steel wrapped in tin. The company is maintaining ~12% OPM due to their efficient process and probably their signature product PAXEL.
I invested in the company anticipating RM prices cooling off, the company being treated as separate from the parent and capex kicking in. Will closely track the sales volumes and OPM for the next 2 quarters.
Disc- Invested ~8% allocation now, will not be adding(~360 avg.)
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