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Taparia Tools Ltd Company Analysis


Taparia Tools Limited Image
Taparia Tools Limited

Company Overview


TAPARIA TOOLS started manufacturing hand tools in 1969 in India in technical collaboration with a reputed company of Sweden.


The senior management from Taparia Tools had gone to Sweden and took practical training in their plant for more than an year. A senior technical manager from the Swedish company also came to India and stayed here for about two years to establish the technology in India with the appropriate hand holding.


Taparia Tools has been since then consistently producing all the hand tools in India with the exact technology of its collaborators.


Manufacturing facility


The company has a well laid out fully equipped factory of 42832 Sq.Mtrs located at Nashik and another expanded unit at Goa. Out of the total of 1200 work force of this, the number of people engaged in direct production is 1000. The remaining are in administrative and management.


The company’s research and development department is manned by Mechanical Engineers and Metallurgists equipped with latest CAD design facilities etc. It has well established quality control department to monitor the quality of the product at different stages of production. In fact Taparia tools meet and some cases exceed the U.S. Federal Specifications of hardness and torque value besides meeting Indian, British and German standards. Taparia tools are guaranteed against manufacturing and raw material defects and are replaced free with no question asked.


The company has fully absorbed the production technology of its Swedish collaborator. In addition to manufacturing facility the factory has a fully equipped Quality Assurance Department and laboratory for meticulous and continuous testing of raw materials up to the final finished products.


The Company’s manufacturing facilities includes modern Forge shop, Machine shop, Heat treatment, Polishing, Nickel chrome plating and so on.


Awards


The Company has received award for export excellence since 1974-75 onwards in the following years 1977-78, 1978-79, 1979-80, 1990-91, 1991-92, 1993-94, 1994-95, 1996-97, 1997-98, 1998-99, 1999-2000,2000-01, 2002-03,2003-04,2005-06 & for the year 2006-07 . The company keeps abreast of all the latest developments in the hand tools industry by continuously participating in International Fairs and events in Europe, U.S.A, etc.


Manufacturing Categories

  1. Adjustable Wrenches (Chrome plated and Phosphate finish with soft grip)

  2. Wide range of Screw Drivers. It includes Screw drivers with Flat tip, Electrician pattern, Phillips tip, Torx tip, Screw Driver Sets, Line Testers, Two in One Screw Drivers, etc.

  3. Varieties of Pliers including Combination Pliers, Side cutting Pliers, Long Nose Pliers, Circlip Pliers, Water Pump Pliers, Pincers, Vice Grip Pliers, etc.

  4. Tool Sets and Kits of various types

  5. Ball Pein, Cross Pein and Claw Hammers.

  6. Forged C-clamps in different sizes from the smallest to the biggest

  7. Chisels in various types and sizes including pneumatic chisels

  8. Double-ended, Ring & Combination Spanners

  9. Various types and sizes of Punches

  10. Pipe Wrenches- Stillson pattern and Swedish pattern

  11. Truck Wheel wrenches.

  12. Fullest range of Sockets and its accessories and Socket sets of all possible sizes namely ¼”, 3/8”, ½”, ¾” & 1” drive etc.


Current Product Profile


Adjustable Spanners, Pliers, Mini Pliers, Screw Drivers & Sets, Bits & Sets Tool Sets, Sockets & Socket accessories, Socket Sets, Torque Wrench, Pipe Wrenches & Vice, Hammer Clamps, Wheel Spanners & Sets, Spanners, Chisels, Punches, Magnetic Products, Cutters, Hacksaw Blades, Allen Keys & Sets, Gear Pullers, Tools Trolley, Spirit Level, Cutting Blades, Non Sparking Tools


New Product Profile


In FY22, company introduced new products viz. Block Plane, Spoke Shave, Pruning Shear, Velcro Disc, Rachet Type Torque Wrench, T- Handle Extra Long Ball Point Allenkey, T- Handle Torx Bar, Auto Wire Stripper, Needle Files, Wheel Socket, Hexagon SD 2 in 1 with Insulation in Economical series, Slogging Ring Off-set Spanner, Hacksaw Frame of Different Varieties, VDE Plier Set, 4” 23 Pcs Socket set, Spares of Block Plane, Spares for Hydraulic Jacks, 32 Pcs Power Tool Bits, Cantilever Tool Box, Tool Kits, Chain Pipe Wrench.


Export Countries


U.K., U.S.A, Denmark, Israel, Germany, Sweden, Norway, Finland, Dubai, Kuwait, Tanzania, Kenya, Hong Kong, Thailand, Mexico, Argentina, Uruguay, U.A.E., SriLanka etc.


Quantitative Analysis


Overall Picture of the Company

Terminology

Value

Market Cap

​₹ 4.04 Cr

Face Value

₹ 10.0

Current Price

₹ 2.66 (as of 3rd September 2023)

Stock P/E

0.05

Book Value

₹ 178

High / Low

₹ 2.66 / 2.10

ROCE

37.3 %

ROE

27.9 %

EPS

₹ 48.3

Current ratio

3.23

Debt

0.58 Cr

Enterprise Value

₹ -1.97 Cr

Pledged percentage

0.00 %

Return on assets

21.3 %


Key takeaways


The Market cap is small since the number of outstanding shares for this company is limited(3 Cr). You should not analyse the company solely in terms of M-Cap here.

Stock P/E is below 1, book value is super high, ROE & ROCE is in an uptrend.


EPS is way above its current market price. Debt is a fraction of its M-Cap. There is no pledged shares from promoters. Enterprise value is negative on the higher side since the company has long term borrowings.


Competitor

Sl No

Name

CMP(₹)

P/E

Mar Cap (₹ Cr)

B.V.(₹)

EPS 12M(₹)

ROE %

ROCE %

EV(₹ Cr)

Free Cash Flow(₹ Cr)

1

1078.80

86.41

50227.70

143.99

12.61

6.88

7.73

56501.42

324.61

2

3703.80

30.72

34934.38

603.40

120.63

20.05

25.11

34630.94

675.34

3

519.45

26.35

19705.98

134.41

2.49

-1.65

14.64

20604.58

675.00

4

713.10

​41.52

11428.91

82.47

17.18

20.65

18.53

12715.01

390.37

5

5269.25

16.03

10660.79

​1604.45

​339.65

14.78

13.11

32521.33

-5573.94

6

5960.40

303.55

8083.65

222.43

20.02

8.68

10.63

8194.32

25.21

7

68.60

13.80

4078.99

73.71

4.97

7.51

9.99

6334.36

268.37

8

2.66

0.05

4.04

177.89

48.34

27.89

37.30

-1.97

82.95


Takeaway from competitor analysis


Although Taparia Tools are at the bottom of the competition in terms of their market cap, the performance they have delivered is rising YOY, as we will be seeing in coming sections.


P&L Statement

(All figures in Lakhs)

Mar 2018

Mar 2019

Mar 2020

Mar 2021

Mar 2022

Mar 2023

Sales

405

471

472

536

668

764

Expenses

384

436

432

471

580

670

Operating Profit

21

35

39

65

87

94

OPM %

5

8

8

12

13

12

Profit before tax

22

36

41

64

87

97

Net Profit

15

24

31

48

65

72

EPS in Rs

9.57

15.47

20.12

31.80

42.82

47.58

Dividend Pay-out %

0

0

0

0

81

65

A P&L statement shows a company's revenues and expenses related to running the business, such as rent, cost of goods sold, freight, and payroll. Each entry on a P&L statement provides insight into how much money a company made and spent.


If we see Taparia’s P&L statement, Sales, Operating profit, profit, EPS has been increasing YOY. But, Operating Profit Margin has been on a steady rate of 12%. Bharat forge and CIE Automotive has OPM in the range of 12%, which tells us 12% is not alarming.


But, OPM has been improved from 5% in 2018 to 12% in 2023. The company has started paying out dividend from 2022 onwards which indicates a healthy sign.


Balance Sheet

(All figures in Lakhs)

Mar 2018

Mar 2019

Mar 2020

Mar 2021

Mar 2022

Mar 2023

Share Capital

3

3

3

3

3

3

Reserves

103

126

157

206

235

267

Borrowings

0

0

1

1

0

1

Other Liabilities

48

65

42

46

79

78

Total Liabilities

154

195

203

256

317

349

Fixed Assets

6

10

11

13

14

14

CWIP

2

6

5

5

5

6

Investments

0

0

23

27

37

83

Other Assets

146

179

163

210

261

246

Total Assets

154

195

203

256

317

349

A balance sheet is a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.


Liabilities: If we see the reserves, it has been increasing from 2018 from 103 Cr to 267 Cr in 2023.


Assets: Increase if fixed assets from 6Cr in 2018 to 14Cr in 2023 with majority contributor of Plant Machinery(21Cr in 2018 to 31Cr in 2023). This increase in plant machinery is a good sign in assets area.


Trades receivable has been seen an increment from 36 Cr to 66 Cr in 2023. This increment is seen in inventories (74Cr to 159Cr in 2023) as well. The potential of inventories is related to inventory days which is also decreasing (we will see inventory days turnover in coming section).


Cash Flow Statement

(All figures in Lakhs)

Mar 2018

Mar 2019

Mar 2020

Mar 2021

Mar 2022

Mar 2023

Cash from Operating Activity

20

-2

28

22

34

85

Cash from Investing Activity

-1

-6

-25

-6

-11

-44

Cash from Financing Activity

-8

0

-1

-1

-37

-40

A cash flow statement is a financial statement that shows how cash entered and exited a company during an accounting period. Cash coming in and out of a business is referred to as cash flows, and accountants use these statements to record, track, and report these transactions.


As we can see, cash from operation activities has been increasing which shows the company is getting money out from its main operations. Cash from investing is negative since it’s the money getting out from the company, thus an expenses from the companies point of view. The cash towards investing has also been steadily increasing.


Share Holding Pattern


The promoters hare having 69.72% while the public is having 30.28%. Since the promoter holding is high, it shows the main people in the company has trust in the company, thus holding a large amount of shares with them. Among the public holding, Veer Enterprise Limited has 9.04% of the total holding.


Qualitative Analysis


To begin with, their annual report is not that fancy, which means they have given least importance for making the annual report. This shows the interest of the company towards the investors.


As part of any rule violation, as of 2022-23 annual report, there hasn’t been any active case going between the company and SEBI. They are also having regular E-voting systems setup for its investors through CDSL.


They are having consistent AGM through the years of their existence and appointment and reappointment of various management level leaders are also taking place parallelly.


According to the promoter share holding pattern, majority of the shares are with Tapraria family. Hence, we can conclude it’s a sole family run business. Let’s hope there will not be any splitting happening like Ambani’s in future.


The company is also actively participating in CSR activities and these are updated on their website. The Company has contributed an amount of ₹1.29 Cr Lakh during F.Y. 2022-2023 towards the corpus of various trusts


For expansion of business, company has initiated and started plant at Valvada, Gujarat State which is under construction.


The expenditure incurred on Research and Development is 1.82 Cr which is 0.24% of the turnover. This percentage is very low compared to competitors. If the company doesn’t decide to put money into R&D, the growth potential will be limited.


The companies threats will be Rising cost of raw material, Competition from domestic/ international imports and Uncertainties due to global crisis.


Conclusion


From a quantitative analysis perspective the company is doing fairly well. Also, going through the annual report, there hasn’t been any misinformation or hiccups in the report. Most of the statements are pointing towards a healthy company.


One of the main problem here is the lack of liquidity in the stock. The volume is in the range of 10k-20k which is extremely low and as you can see, only 5 times there was a trading day out of 6 months timeline. Which means, to buy the stock will also be extremely difficult. Also, beware that the stock might hit upper and lower circuit most of the time because of liquidity.


At the end of the day, you will have to do your own analysis of the company to come up with your own conclusion. How long do you want to keep the stock and what is the purpose your buying this stock.


Disclaimer: This article should solely use for education purpose only. The intent of this article is for you to understand how to analyse a company, where all to look and which all factors to consider. This article should not be used as stock recommendation.



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