Mulitbagger stock Tinna Rubber and Infrastructure delivered returns of 207% in a year: What does their future look like?

Tinna Rubber And Infra : In today’s article, we are going to talk about a tire recycling company. Well, before you judge what is exciting to talk about a tire recycler, this company that we are going to see has given a return of around 245 percent over the past year. Even if you look at the return for the period of three years, the company has given a return of 2,766.64 percent. It was almost a 30-bagger in just three years! We are talking about Tinna Rubber and Infra. 

You see, with the recognition of limited natural resources, the global focus has shifted towards recycling, a trend embraced by companies aiming to incorporate more recycled materials into their products and formulas. 

Tinna Rubber And Infra 

The rubber sector is no stranger to this movement. End-of-life tires have become a significant reservoir of recycled rubber on a global scale, transitioning from waste to valuable resources. This transformation has spurred the growth of the reclaimed rubber industry, adapting to the new reality of utilizing recycled rubber from tires. 

But there is one important thing to notice here. One of the most famous ace investors, Dolly Khanna, has reduced her shareholding in the company to less than 1 percent. In December 2022, the shareholding stood at 1.6 percent. But why has the shareholding reduced over the period of one year? Let’s understand what the company does and what its future holds. 

Corporate Overview 

Established in 1987, Tinna Rubber and Infra Limited initially focused on serving the export market for footwear and footwear components. In 1991, the company diversified into manufacturing and exporting Thermoplastic Rubber Compounds (TPR), launching a new unit in Bombay, which commenced production in June of the same year.

Currently, the company is involved in the production and export of leather footwear, footwear components, TPR compounds, and merchant exports to various countries including the U.K., Canada, Italy, Australia, CIS countries, and Portugal. 

Tinna Rubber and Infra Limited manufactures and exports shoes for renowned international companies such as Liverpool Shoe Co. (a part of the Pentland Group), Ravel (a division of Clark Shoes of England), British Bata, Kidder Minster, Shoe Fayre, Bacons, L.M. International (U.K.), CICIL Brothers, R.Hannah Co. (Australia), and Worldwide Tradings (Canada), along with supplying to esteemed European chains like C&A, GUS, Stead & Simpson. TRIL is an industry pioneer in producing crumb rubber modifiers (CRM) for bitumen, with nearly 1,00,000 lane kilometres paved in India using CRMB and their CRM products. 

Distinguished as the sole company engaged in rubber-based solutions for both road bitumen and non-road industries, TRIL also manufactures value-added products from steel reconditioning, ensuring a steady supply of ELTs from regions like the Middle East, Africa, and Europe. As a leading player in Crumb Rubber and Bituminous products, TRIL has secured a significant market share through its unwavering commitment to quality, reliability, and customer satisfaction. 

TRIL Segments 

The company initially acquires waste tires from global sources and processes them in an eco-friendly manner, ensuring zero waste and pollution. TRIL’s research and development team has devised several value-added products derived from waste tires, featuring innovative applications as follows: 

● High Tensile Crumb: for rubber compounds, for use in the rubber industry including tyres.

● Crumb Rubber Modifier: for blending with Bitumen to make rubberized bitumen. 

● Reclaim Rubber: as a raw material for the rubber product industry.

● Hi Carbon Solid Steel Shots: for shot blasting, surface preparation applications. 

● Hi Carbon Steel Scrap: for melting and reuse. 

The company has successfully developed and brought to market its products, including Hi Carbon Steel Abrasives and Reclaim Rubber/Ultra Fine Crumb Rubber. While previously, the main sales focus of the company was on Crumb Rubber Modifier (CRM) and other road-related products used in the infra sector, the company has intentionally decreased its reliance on this sector in recent times. 

As of FY23, in the finished goods section, the road sector contributed around 32.5 percent of the total revenue. the non-road sector, which consists of products such as crumb rubber, contributed around 34.4 percent of the total revenue in the same financial year. 

Tinna Rubber And Infrastructure – Financials

In the fiscal year 2023, TRIL saw a notable increase in revenue, surging by 28.8% to reach ₹295 crore as opposed to ₹229 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a robust Compound Annual Growth Rate (CAGR) of 33.8% in revenue. 

Simultaneously, there was a substantial upturn in net profit, experiencing a 29.4% increase from ₹22 crore in FY2022 to ₹17 crore in FY2023. However, the company remained in loss for over five years prior to FY2022. The reason for the improved financial performance in recent times is due to the company’s focus on high capacity utilisation which helped the company to get benefits from economies of scale. 

In FY23, TRIL maintained positive financial indicators, boasting a strong Return on Equity (ROE) of 22.71 percent and a Return on Capital Employed (ROCE) of 28.10 percent. 

TRIL has consistently reduced its debt over time. The strong operating cash flow further strengthened the balance sheet, enabling the company to deleverage and reduce overall debt. Better financial performance also enabled TRIl to reduce its cost of debt. 

Future Outlook 

● The company has recently clinched a lucrative two-year contract with Indian Oil Corporation Limited, valued at ₹107 Crore, for the supply of Crumb Rubber Modifier. Additionally, TRIL anticipates a rise in consumer sales, particularly in Sports Turfs, Gym Mats, and Rubber Tiles, in FY24. 

● In the preceding fiscal year, the company made significant strides in its expansion endeavors. It commenced the construction of a greenfield plant in Varle, Maharashtra, aimed at processing 60,000 tons of Old Used Passenger Car Tyre Scrap (PCR) annually to produce Tyre Derived Energy (TDE) and Crumb Rubber. This facility, strategically located just 5 KM from its existing Wada Plant, is already underway with land acquisition and construction. 

● Furthermore, TRIL embarked on a pioneering venture by establishing its inaugural pilot plant dedicated to producing Composite Polymer. This

innovative facility will have an annual processing capacity of 6000 tons, utilizing 60% plastic waste (LDPE/HDPE/PP) and 40% in-house produced Crumb Rubber derived from old used tires. 

● The company has completed the acquisition of its maiden overseas facility in Oman. This facility will possess a capacity of around 18,000 MT annually. This move underscores TRIL’s commitment to globalizing its tire recycling expertise and capitalizing on emerging opportunities in the international market. 

● The company has recently ventured into the making of Thermo Plastic Elastomer (TPE) out of waste rubber & waste plastic Panipat. The capacity product for this product is estimated to be around 6,000 MT annually. The commencement of Production is expected to be started by Q4 FY24. 

Conclusion 

These factors position TRIL favorably for sustained growth and potentially enhanced valuation in the future. However, the precise magnitude of this growth and its implications for the company’s valuation remains subject to conjecture and warrant further discussion. So, share your thoughts in the comments section below! 

Written by Nalin Suriya S

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