Indian Toners and Developers: Value buy or value trap?


(pradeep n k) #61

Dear investors, Kindly go through paper cuttings about indian toners announcement in bse, you will just get an idea about the savings in rental cost of all these subsidiaries after merging with Indian toners, savings in power costs of its subsidiaries, better utilisation of manpower, other statutory fees to be paid out of books will stop and assets standing in the name of these subsidiaries will come to the books of indian toners… so this can contribute to operating margins by minimum 200 basis points and result in an even faster growth of indian toners… it`s a big positive as far as indian toners is considered…


(pradeep n k) #62

investing in indian toners is definitely a wonderful thing … manufacturing toner powder and marketing toners is not so easy thing as one imagines it to be, simply because toner market is flooded with cheap, unbranded toners from China wherein new entrant will get stormed in case if they would want to compete with those cheap alternatives… Indian toners in such a bizarre market where manufacturing and marketing quality toners was thought unviable has made a niche for itself by offering ultimate quality toners at an affordable cost, where even those second quality Chinese companies can`t compete with Indian toners… Indian toners and developers Ltd are creating awareness about their product quality and toner market has been rewarding them handsomely to such an extent that they are expanding rapidly and building up capacities( this is evident from their recent expansion of capacity by 600 mt, they have been operating at 100% capacity utilisation)… This is at such a time when others are moving away from toner market due to extreme competition… indian toners is a niche market play with its distinctive brand being recognised across categories, which is a moat surely…


(pradeep n k) #63

At present indian toners is not participating in market rally simply because its not a commodity play like others which thereby tend to be cyclical… it`s actually like a fmcg company of printer toner sector, where it owns 3 powerful brands itdl color premium, supremo, and formula-L which are larger than life for indian toners…There has been sufficient efforts from management to position these brands globally and domestically, there has been numerous product launches and product awareness programs being conducted to keep the demand for their product going…They have setup warehouse and have been marketing indian toners brands in USA aggressively by taking Allan kronstat on board…These are certain dots which we need to connect to get a proper picture of indian toners and its bright future…


#64

Shareholding data for September 2016 doesnt shows data after merger , might be they have not receive approval from high court,? Is there any other reason?


(pradeep n k) #65

Amalgamation order is awaited and it may come any time soon. KINDLY GO THROUGH THE BELOW LINK WHICH EXPLAINS ABOUT THE NEW MANAGED PRINT SERVICES FROM ITDL

http://indiantoners.com/in/imps-brand-neutral-managed-print-services.aspx


(pradeep n k) #66

ITDL (INDIAN TONERS) management has been proactive in taking the company to a level at which it is today… They have evolved with changing market trends and hence they are able to compete aggressively and successfully in ever-changing printer toner industry… They have been in this toner business from past 25 years and are pioneers, they have created value to all of their shareholders significantly and recent developments only adds to the confidence on the management… They have been proactive and their management style is unique, with the father and son working dedicatedly and tirelessly taking the whole management team into confidence…


(vij) #67

Hi @appunk - Thank you for keeping this thread updated :slight_smile:

I am considering this. Have a few questions:

  1. What is the kind of dilution post merger? What will be the mcap after merger?
  2. What is the management commentary like for the future ?

Thanks


(pradeep n k) #68

Comparison of companies operating in different fields would not be appropriate but still I would like to share my experience of investment in avanti feeds… it was at 70 rupees with 10 rupees face value, it was considered cyclical then… what made me invest in that company was the really active management, they were reaching out to investors and were making technological tie ups…it was quite unusual for a microcap company of that size, investing in an unknown company like avanti feeds required lots of courage with no liquid volumes to support… but now when you look back you realise how wise your investment decision was…one common thing in every successful investment is the management quality and integrity and I find that same quality in indian toners management, just go through events of last 6 months such as announcement of amalgamation of subsidiaries, capacity expansion, hiring Mr Allan kronstat, formation of wholly owned subsidiary indian toners USA company, new product launches, and launch of i-mps( ITDL MANAGED PRINT SERVICES ), all these point one single thing that growth is coming in a big way in times to come…


(pradeep n k) #69

With respect to market cap after amalgamation, it will be market price multiplied by 13… equity size will be 13 crores paidup… about management commentary they are upbeat on toner sales with enhanced production coming on stream by January, exports likely picking up which has always performed well, new kindof service- managed print services coming on stream they will definitely consolidate their position in domestic market too… overall they are very competitive in a growing sector…


(vishwa.bhat19) #70

Hey Guys,

Good Day!!

Based on the consolidated earnings last year of around Rs.13.21 per share doesn’t it make the company have a PE ratio of around 11.06?

Isn’t this a very low PE for a company that seems to be having great prospects (But of course there is still the problem of the father and son duo not paying dividends etc.)?

Regards,
Vishwa

PS:
Also anyone remember the episode in friends where Phoebe is trying to sell Toner to a man who is about to kill himself. Looks like the Toner industry is a very competitive one and not just now, but from a long time ago :slight_smile:


(kums17) #71

VFUTURE OUTLOOK AND PLANS ( As given in AR of the company)
Your Company foresees a good scope for the export of its products. In order to give a boost to the exports, your Company has decided to incorporate a Wholly Owned Subsidiary of the Company in Florida (USA). It will mainly cater to the needs of North and South America as these have been the untapped markets so far. However, frequent and wide fluctuations in foreign currency and tough competition in the international market continues to be a challenge for your Company.
Efforts are going on to develop more products of toner and your Company is hopeful to achieve the desired results with the help of the research team. Some other value added products have already been added in the product list like the wide format printer toners.
The Management of your Company is actively exploring opportunities to invest in some new projects.


#72

New product introduced by ITDL - HP 18A - (Laser Toner)
For complete list https://lnkd.in/bXTdtta


(Sameer_srj) #73

Q4 Results of Indian Toners will be announced on 20 May.


(NeelaVi) #74

Q4 results anounced, Net profit up by 201.36% YOY

At march 2017 at the price of 162.5 P/E will be around 11.2 and its industry P/E is 24.53… Seems to be cheap stock with potential…


#75

merger will soon happen n will unlock d value


(Rajeev Jawahar) #76

Indian Toners came out with a very good set of numbers for the March quarter with a further improvement in its operating margins. It has recently expanded its total capacity to 3600 tons entirely from internal accruals. The focus has now shifted from exports to the domestic market where the Co. has a niche. The expanded capacity will help in scaling up its top line with improved margins going forward. The current price of 180, the stock trades in a single digit multiple for 17-18, with a total market cap of under 150 crs. With high return ratios, & the fact that a lot of business is “B to C”, the stock looks pretty under valued.

The Co. is also in the final stages of restructuring, with the amalgamation of all its subsidiaries. This will help in investor perception towards the Co. as well. Earlier, the corporate governance was considered suspect with the promoters conveniently taking dividends from the subsidiary while denying the same to the minority shareholders. I guess the promoters have woken up to the virtues of a decent market cap!!

Post restructuring, the promoter holding will go up to almost 70%, so all the boxes are slowly getting ticked!

Disc: Invested.


(Bheeshma Sanghani) #77

Another point to note is that post restructuring the company will become a debt capacity bargain based on its 2016 cash flows. The 2017 cash flow numbers are yet to come in but judging by its results they can be expected to be higher making the case for a valuation gap even more compelling.

Disc - invested


(Rohit Balakrishnan) #78

I think one should now start to look at the company on post amalgamation basis. The market cap at the CMP of ~ 190 is ~ 250 Crores and not 150 Crores.


(Rajeev Jawahar) #79

Yes Rohit, you make a valid point, but in that case one would have to add back the minority interest. I guess either way things don’t change much in terms of the earnings multiple.

As you have been tracking this story longer, how do you see 17-18 playing out?


(Bheeshma Sanghani) #80

Hi @rohitbalakrish_

I am trying to get a sense of valuation, so correct me if there are some errors in the calculaton as I am not an expert in this.

based on the exchange ratio contained in this document

http://www.indiantoners.com/pdf/investor-relations/scheme-of-arrangement/annexure-5-fairness-itdl-final.pdf

1028 shares of ITDL will be exchanged for 100 shares of IIL ( its main subsidiary ITDL Imagetec Ltd)

As per its 2016 AR it holds 5,10,000 shares of IIL for a 51% share. So the remaining 49% consists of 4,90,000 shares. In total = 10,00,000 IIL shares

All these 10L IIL shares are now proposed to be converted to ITDL shares in the aforementioned ratio. Shareholders of IIL will therefore be receiving 10.28 shares of ITDL for 1 share held by them. This implies an issue of 1,02,80,000 ITDL shares.

Currently ITDL has 80,58,900 equity shares. So the total amount of ITDL shares after restructuring should be at least

80,58,900 + 1,02,80,000 = 1,83,38,900 shares

The CMP as of today is 186

So the expected market cap is ~341cr? ( 1,83,38,900 x Rs 186 ).

Is there a goof up in my thinking?