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Healthy in-line quarter; 1:1 bonus issue

Revenue/EBITDA/PAT grew 10%/12%/20% YoY in 1QFY26

TIME reported a healthy and in-line set of results in 1QFY26. Volume/revenue/ EBITDA/PAT grew 14%/10%/12%/20% YoY. Volume growth of 14% was led by 17% rise in Overseas business, while India business grew 12%. EBITDA margin stood high at 14.4%. CFO of INR1.16b was majorly used for capex (INR434m) and debt reduction (INR374m) during the quarter. The board also approved a 1:1 bonus issue.

Focusing on high-margin VAP business

Value-added products (VAPs) are a high-growth (20-30% CAGR), high-margin (18%+) business for TIME. In 1Q, VAP revenue grew 15% YoY (IBC up 17%, CNG up 20%, LPG up 6%; 26% mix) with a high 18% EBITDA margin. The Established Products segment’s performance remained moderate but stable, as 1Q revenue was up 8% YoY (74% mix) and EBITDA margin was 13.2%. Overseas business (volume/revenue up 17%/14% YoY, revenue mix 38%, EBITDA/PAT margins at 14.1%/7.9%) continued to outperform India business (volume/revenue up 12%/8% YoY, EBITDA/PAT margins at 14.7%/6.5%). TIME constantly evaluates the applications of composite products across industries that could generate immense revenue for it. With this, management aims to raise its VAP revenue mix from 27% in FY25 to 35% in the next 2-3 years and push EBITDA margin to ~15% (14.4% in FY25). It sees hydrogen composite cylinders as a big opportunity and has signed MoU with Drone Stark to develop hydrogen-powered drones using composite hydrogen cylinders and fuel cell technology. There is also a big market for fire extinguishers. It also plans to set up a recycling unit by investing INR1.2b over the next 3-4 years. US tariffs have no impact due to local manufacturing and selling of products.

Plans to raise up to INR10b via QIP to fuel growth and balance sheet

TIME plans to raise up to INR10b via QIP for various activities, including capex, debt reduction, working capital, acquisitions, etc. Divestment of non-core assets continued (INR470m pending from INR1.25b identified). RoCE of 20% in FY26E will be driven by focussing on cost reductions through automation, re-engineering of machinery and moulds, and optimization of the working capital cycle. Products and manufacturing units consolidation is underway to boost efficiency.

Valuation and view

We maintain our earnings estimates after in-line results in 1QFY26. After clocking a CAGR of 16%/19%/39% in revenue/EBITDA/PAT over FY21-25, we now estimate a CAGR of 15%/16%/23% over FY25-28, to be fueled by its strong performance in the VAP segment (20% revenue CAGR, 18%+ EBITDA margin, revenue mix improving to over 30% from 27% currently). Pre-tax RoCE and RoIC are expected to expand from ~18.2% each in FY25 (FY24: 16-17%) to ~23% and 26% in FY28, respectively, led by healthy operating performance, improved plant efficiency, and tightening of the net working capital cycle. Driven by a robust outlook and attractive valuation (~17x FY27E P/E), we retain our BUY rating and TP of INR578 (31% upside potential), based on 22x FY27E P/E.

1QFY26 earnings concall key takeaways

Business development and outlook

• Announced a 1:1 bonus issue.
• Focusing on higher-margin VAP business.
• Plans to raise up to INR10b via QIP for capex, debt reductions, working capital needs, acquisitions, etc.
• Non-core asset divestment (INR470m pending from INR1.25b identified).
• RoCE of 20% in FY26E will be driven by its continued focus on cost reductions through automation, re-engineering of machinery and moulds, and optimization of the working capital cycle.
• Strategic decision to consolidate products and manufacturing units in India and overseas underway to improve efficiency.
• Fundraise of up to INR10b through QIP is valid till 27th Nov’25.
• Signed MoU with Drone Stark to develop hydrogen-powered drones using composite hydrogen cylinders and fuel cell technology.
• To transform 75% of electricity consumption to green energy within the next two years through a tie-up with solar power generating companies.
• To set up a recycling unit by investing INR1.2b over the next 3-4 years in fully automated recycling plants across key Indian regions (West, North, South, East) with the capacity to process up to 60,000 MT of plastic annually.
• US tariffs have no impact due to local manufacturing and selling of products.
• Continuously putting efforts in R&D to develop composite products for new applications, which can have a big market in few years.
• Fire extinguisher is also a big market; Indian Railway has mandated to use only composite cylinders in the new Vande Bharat trains.

1QFY26 performance

• Volume/revenue/EBITDA/PBT/PAT grew 14%/10%/12%/18%/20% YoY.
• EBITDA margin was healthy at 14.4%.
• Volume growth of 14% was led by 17% rise in overseas business, while India business grew 12%.
• CFO was healthy at INR1.16b, spent on capex (INR434m) and debt reduction (INR374m) during the quarter.

Operating metrics (1QFY26)

• Established Products: revenue up 8% YoY, revenue mix 74%, EBITDA margin 13.2%
• VAP: revenue up 15% YoY (IBC up 17%, CNG up 20%, LPG up 6%), revenue mix 26%, EBITDA margin 18%
• India: volume/revenue up 12%/8% YoY, revenue mix 62%, EBITDA margin 14.7%, PAT margin 6.5%
• Overseas: volume/revenue up 17%/14% YoY, revenue mix 38%, EBITDA margin 14.1%, PAT margin 7.9%
• Polymer Product: revenue up 7% YoY, revenue mix 64%, EBITDA margin 13.9%
• Composite Products: revenue up 15% YoY, revenue mix 36%, EBITDA margin 15.4%
• Capacity utilization: blended ~85%

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