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Technocraft Industries India Ltd Analysis !!
#TIIL

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About -

Technocraft was established in 1972 by two brothers Mr. S.K. Saraf & Mr. S.M. Saraf. The brothers who are IIT Graduates & Technologists, had started with the aim of mfg high precision & sophisticated Drum Closures Products.

Until 1976 Co was focused on domestic market.
India was not recognised as reliable export nation those days, against all the odds, co launched a major export drive in 1977.

In 1994, co acquired "Maharashtra Steel Tubes" a steel pipe manufacturer.

In 1997, Technocraft diversified into manufacturing of Cotton Yarn.

Today, Technocraft as a group has been a predominant player in the precision engineering sector.

Location Wise Break-Up -

Technocraft today has been earning 32.3% from India and 67.7% from Rest of the world.

Financial Summary -
Q3 FY23 (YoY)

Revenue were at Rs.517 Cr.⬆️0.21%
PAT at Rs.84 Cr.⬆️33%
EPS at Rs.34 ⬆️33%

Revenue Breakup -

Technocraft earns 39.7% of it's revenue form Scaffolding
27.6% from Drum Closure
17% from Yarn
9.3% Fabric
6.5% Engineering & Design / IT.

▪️Scaffolding & Formwork:

This segment comprises scaffolding, formwork & tower business with 75-80% of Rev accruing from overseas markets. These products are supplied to industries such as oil & gas, power, refineries, petrochemical, infrastructure & commercial construction.

▪️Drum Closure:

Technocraft is World's 2nd largest manufacturer of high precision & sophisticated Drum Closures Products. Out of the total revenue of the drum division approx 90% comes from export.

Co continues to enjoy a worldwide market share of about 36% excluding China.

▪️Yarn & Fabric:

Technocraft produces a variety of products ranging from NE 20 to NE 40, Carded and Combed varieties of Cotton Yarn. Company exports approx. 56% of Yarn products mainly in Europe, Asia, Latin America etc.

▪️Engeneering & Design / IT:

Technosoft Engineering Projects Ltd is a subsidiary of the Company offering broad-based engineering, designing & IT services using a variety of client partnership models for delivery.

Technosoft operates in North America through its subsidiaries, which provides general engineering & designing services.
Out of the total revenue of this division, 95% was generated from exports.

Industry Outlook -

• Scaffolding & Formwork :

Rapid urbanization, industrialization & growth in construction industry significantly driving the Scaffolding & Formwork market size.
Rise in infra development activities across the globe further contributing to market expansion.

Global formwork & scaffolding market is projected to grow at a CAGR of 5.8% by 2030.

• Drum Closure :

Global Steel Drums Market is expected to hit a market value of US$ 23 Bn by 2029 from 16 Bn in 2022, projected to grow at a CAGR of 4.8%.

Increasing global trade & growing proclivity to invest in efficient transportation are supporting market growth.

Chemicals, agro-chemicals and food & beverage industries are the major end-use segments driving the demand for industrial drums. The Asia-Pacific (APAC) is witnessing the highest growth rate, around 6-7%.

• Textiles :

Indian textiles market is expected to be worth more than US$ 209 Billion by 2029. India is the world’s largest
producer of cotton.

India’s textile & apparel exports (including handicrafts) stood at US$ 44.4 billion in FY22, a 41% increase YoY.

Opportunity & Future Plan -

Technocraft is focusing in exploring new products in scaffolding / formwork.

Govt initiatives such as RERA, Affordable housing, Smart Cities expected to boost growth of Indian real estate industry, which will create tremendous growth in scaffolding.

Technocraft has also started Spinning unit at Amravat.

Company is working strongly & increasing the sales & profitability in China which is one of the main growing
markets for Drum Closures division. Drum Closure division is growing in China.

Technocraft has 3 Global patent products for manufacturing of GRT Flanges, Octagonal Clinched & Drum Top.

Risk -

• Increase in commodity prices like steel & cotton may affect the performance in case they unable to pass the rise in commodity prices to its customers.

• Volatility in foreign exchange may affect Co’s profitability as it does not hedge its export receivables fully.

• The yarn & fabric industry in India is highly competitive & dependent on exports to China and Bangladesh. Technocraft is susceptible to volatility in demand & spreads affecting the profitability.

Fundamentals -

Market Cap : ₹ 3,382 Cr
P/E (Stock): 11.9
P/E (Industry): 19.1
P/B : 2.45
Debt to equity : 0.34
ROE : 21.8 %
ROCE : 22.2 %
EV/EBITDA : 7.89

Conclusion -

Long term growth prospects seems positive of Technocraft Industries driven by its strong leadership in Drum Closure & Scaffolding/Formwork.

Technocraft is a multiproduct company, they're very well spread out and as a result are able to get benefits from each sector in its upturn and the downturn in one particular sector is balanced by the other sectors.

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