TCPL Packaging soars 16%, hits record high on healthy business outlook

In Q2FY23, the company's consolidated revenues grew by 43 per cent YoY to Rs 361.7 crore on the back of higher volumes and better realizations

Shares of TCPL Packaging hit a record high of Rs 1,650.30 as they rallied 16 per cent on the BSE in Friday's intra-day trade, in an otherwise subdued market, on healthy business outlook. The stock of the packaging company surpassed its previous high of Rs 1,540.45, touched on September 5, 2022. In comparison, the S&P BSE Sensex was down 0.04 per cent at 61,725 at 09:34 am.

In the past two weeks, the stock price of TCPL Packaging has zoomed 44 per cent after it reported a strong performance in the September quarter (Q2FY23) amidst a challenging operating environment. In Q2FY23, the company's consolidated revenues grew by 43 per cent year-on-year (YoY) to Rs 361.7 crore on the back of higher volumes and better realizations.

In addition, the company witnessed stability in its key raw materials, which enabled the company to register robust profitability during the quarter. Earnings before interest, taxes, depreciation, and amortization (ebitda) improved by 60 per cent YoY to Rs 57.5 crore, while margins improved 165 bps at 15.9 per cent.

The consolidated profit after tax more-than-doubled to Rs 39.50 crore from Rs 10.6 crore in the year-ago quarter. This pertains to an insurance claim of Rs 17.3 crore for loss of fixed assets damaged by fire, and loss of profit in the previous year, the company said.

TCPL Packaging is one of India's leading producers of sustainable packaging solutions for customers across industries. Over the coming years, the packaging industry is expected to witness huge growth as India moves towards self-reliance in manufacturing across various industries, the company said.

However, some of the key underlying industries are witnessing a muted demand environment. So, the management remains cautiously optimistic about near-term outlook. However, the longer term trend for the packaging industry remains very buoyant.

With the acquisition of Creative Offset Printers Private Limited (COPPL), TCPL Packaging has entered the high potential rigid box segment that serves multiple, fast growing end-user electronics industries. Since the acquisition, the management said the company has been able to expand its product portfolio by onboarding a number of well-known brands in the electronics industry, including smartphones, smartwatches, headphones etc.

Meanwhile, in the past six months, the stock price of TCPL Packaging has surged 110 per cent, as compared to 14 per cent rise in the S&P BSE Sensex. Thus far in the calendar year 2022, it has zoomed 219 per cent, as against 4 per cent gain in the benchmark index.

Technical View

Bias: Cautiously Positive

Target: Rs 1,756; Rs 1,920

Support: Rs 1,590; Rs 1,545

With today's sharp rally, TCPL Packaging has broken above the higher-end of the Bollinger Bands on the daily chart. The near-term bias is likely to remain positive as long as the stock sustains above Rs 1,590.

The stock is also seen trading firmly above the higher-end of the Bollinger Bands on the weekly chart. This, too, indicates support at Rs 1,545-level.

The overall trend on the daily and the weekly charts is positive with the stock trading fairly above the key moving averages. 

That said, the stock has rallied as much as 209 per cent since February, and seems to be heavily overbought on the monthly chart. Select momentum oscillators, such as RSI, are showing some negative divergence. Hence, one may expect the stock to correct or consolidate in the medium-to-long term period.

For now, the stock can potentially test Rs 1,756, or gain up to Rs 1,920, indicates the quarterly Fibonacci chart.

(With inputs from Rex Cano)