"Technocraft Industries (India) as a group has been a predominant player in the precision engineering sector & it has done a forward integration of tube division by producing high precision scaffolding systems for building construction. The cotton yarn division has also forward integrated its operations by production & export of Garments. Through its subsidiary, TIIL has been constantly upgrading its capacity & improving its standards to meet the ever-increasing expectations of its customers. The strategy adopted by the company comprises of growth through constant innovation, enter new categories, and focus both on domestic as well as foreign markets. TIIL also produces plastic closures for small metal and plastic containers. Demand for plastic closures is growing exponentially, particularly in developing countries where crude contraptions have been in use so far for same application. These closures are highly engineered and also meet stringent quality norms."
"TIIL is in sound financial health. Equity capital of Rs 31.5 crore is supported by strong reserves of Rs 466 crore, which gives the book value of the share of Rs 158. The value of its gross block stood at Rs 392 crore. Investments including in subsidiaries is Rs 88 crore. The borrowings of Rs 118 crore give the healthy DER of 0.24:1. Cash on hand is Rs 19.4 crore."
"Valuation & Recommendation: TIIL is among the largest manufacturers and exporters of drum closures with an annual production of over 25 million sets exported to 60 countries in the world. It is well positioned to maintain and enhance its position in the respective industries it is in. It plans to have a balanced growth in each of its trade divisions. Its strategy to further strengthen its positions in the respective trade divisions. The continuous and sustained focus on drum closures, scaffoldings, widening of its customer base, expansion in all of its business line, reduction of operational costs, adding new products in the garment division etc. give strong visibility to revenue & profits in the coming years. At the CMP of Rs 64, the share is traded at a P/E of 2.7x on FY13A and 2.2x on FY14E. We recommend BUY with a target price of Rs 90 in the medium term," says Sunidhi Securities research report.
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