Buy Time Technoplast Ltd for the Target Rs.280 by Motilal Oswal Financial Services Ltd
Business broadly on track; rising polymer prices to aid margins
Time Technoplast’s (TIME) business operations remain broadly stable despite ongoing conflicts in parts of the Middle East (~11% of revenue). Its B2B industrial packaging business (~65% of revenue) has moderate growth but a very stable business profile. TIME’s strategy of sourcing raw materials, manufacturing, and selling finished products locally across 11 countries helps mitigate major supply chain disruptions arising from geopolitical tensions. In addition, the company has explored options to diversify sourcing of glass fiber and other key raw materials for its composite products through alternate overseas markets and sea routes. The company has successfully passed on most of the raw material cost inflation (30-40%) to customers. Capex execution remains on track, including commissioning a greenfield plant with 600 CNG cascades capacity along with a recycling unit, and completing the brownfield expansion of its IBC facility in 4QFY26. While higher prices may slightly impact volumes in the short term, they are expected to support value growth and margin expansion, aided by lowcost inventory. Overall, the impact on financials is expected to be negligible. A ~15% correction in TIME’s scrip from its recent peak makes it more attractive at ~14x/~12x FY27E/28E P/E. We, thus, reiterate our BUY rating with a TP of INR280 (69% upside), based on 20x FY28E P/E. The company’s focus on developing composite cylinders for various applications, along with a rising VAP mix, supports its robust outlook.
Business broadly on track despite escalating tensions in the Middle East
TIME operates its B2B industrial packaging business across India and 10 overseas markets, which constitute ~65% of total revenue. The segment has demonstrated moderate growth with a stable business profile. Further, the strategy of sourcing raw materials, manufacturing, and selling finished products locally in these markets helps mitigate major supply chain disruptions arising from geopolitical tensions. In addition, TIME has explored options to increase sourcing of glass fiber and other key raw materials for composite products manufactured in India through alternate overseas markets and sea routes.
Rising polymer prices augur well for value growth and margins
TIME typically maintains about three months of raw material inventory. Following a 30-40% rise in polymer prices in the last 4-5 weeks, the company has implemented an adequate price increase, which has been accepted by its industrial customers. While higher prices may slightly impact volumes in the short term, they augur well for value growth and margin expansion (as the company uses low-cost inventory). We, thus, reiterate our earnings estimates and expect a revenue/EBITDA/PAT CAGR of 14%/15%/22% over FY25-28, with RoE/RoCE expanding to ~16%/23% in FY28 (FY25: ~13%/18%).
Recent correction in stock price makes TIME’s scrip more attractive
A ~15% correction in TIME’s scrip from its recent peak makes it more attractive at ~14x/~12x FY27E/28E P/E. We, thus, reiterate our BUY rating and a TP of INR280 (69% upside potential), based on 20x FY28E P/E. The company’s focus on developing composite cylinders for various applications, along with an increasing VAP mix to 35% over the next 2-3 years, is likely to support its robust outlook.
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