Time Technoplast Ltd – Bringing Polymers to Life
Incorporated in 1992, Time Technoplast Ltd. is a leading polymer and composite product company. The company has established its position in the industry with the launch of several first in India products such as PE drums, plastic fuel tanks for commercial vehicles, lithium batteries, spray suspension systems etc. It is a multinational conglomerate with operations in Bahrain, Egypt, Indonesia, Malaysia, U.A.E, Taiwan, Vietnam, Saudi Arabia & USA and India. As of FY24, the company’s R&D consists of 35 experts and operates more than 40 manufacturing facilities across the globe.
Products and Services
The company’s diverse product line comprises of intermediate bulk container (IBC), end-to-end material handling products such as containers, plastic crates and pallets, mox films, cross laminated films, composite cylinders such as LPG cylinders, CNG cylinders and oxygen/scba cylinders, industrial packaging products like drums, containers, conipails and PET sheets, pipes for infrastructure projects, automotive components such as rain flaps, fuel tanks, air ducts, lifestyle products such as mats, furniture, bins and protective face shields.
Subsidiaries: As of FY24, the company has 8 subsidiaries and one joint venture company.
Investment Rationale
- Diversified operations – The company boasts a diverse portfolio of products that serve a broad spectrum of industries. Its “established products” range offers innovative packaging solutions for sectors such as specialty chemicals, FMCG, textiles, agriculture, construction chemicals, paints and inks, and pharmaceuticals. Additionally, the company’s “value-added” offerings include IBCs, composite products like LPG cylinders, CNG cascades, and MOX films. In the IBCs business, the company is the largest and major player in most countries it operates in. Beyond these, the company also supports industries such as railways, solar energy, automotive, and lifestyle products. Its presence across multiple sectors enhances resilience to market fluctuations, ensures stable revenue streams, and enables the leveraging of industry insights for continuous innovation and growth.
- Potential of composite products – The company aims to boost the proportion of margin-accretive, value-added, and composite products in its portfolio, with a focus on CNG, LPG, and hydrogen. It has obtained approval to manufacture the high-pressure Type 4 composite cylinder prototype for hydrogen, becoming the first company in India to secure this approval. In addition, it has successfully developed the Type-III Composite Cylinder for Breathing Air/Medical Oxygen, marking the first locally produced cylinder for this purpose. The company is also working on the development of composite fire extinguishers and composite water heaters. In Q2FY25, strong demand for its Type-4 Composite Cylinders for CNG cascades resulted in an order book valued at Rs.185 crore. The company’s subsidiary NED Energy Ltd. is developing E-rickshaw batteries with the prototype already developed and submitted for approval.
- Q2FY25 – The company generated a revenue of Rs.1,372 crore, achieving an increase of 15% as compared to the Rs.1,195 crore of Q2FY24. Volumes increased by an overall 17% during the quarter. EBITDA improved by 18% YoY, from Rs.167 crore to Rs.197 crore. Net profit stood at Rs.98 crore, an upsurge of 40% from Rs.70 crore of Q2FY24. The value-added products grew by 21% during the quarter, while established products grew by 13%.
- FY24 – The company generated revenue of Rs.4,993 crore, an increase of 16% compared to FY23 revenue. Operating profit is at Rs.705 crore, up by 21% YoY. The company posted net profit of Rs.316 crore, a jump of 41% YoY.
- Financial performance – The company has generated revenue and net profit CAGR of 18% and 43% over the period of 3 years (FY21-24). Average 3-year ROE & ROCE is around 11% & 14% for FY21-24 period. The company has a debt-to-equity ratio of 0.29.
Industry
Packaging industry stands as the fifth largest industry in India and the government is focusing on several initiatives that focus on sustainable manufacturing methods. The expansion of the middle class, enhancements in supply chain infrastructure, and the rise of e-commerce platforms are primary factors driving the packaging industry’s growth trajectory. The global Packaging Market size is estimated to be USD 1.14 trillion in 2024, projected to reach USD 1.38 trillion by 2029, growing at a CAGR of 3.89% (20242029). The India Packaging Market size is estimated at USD 84.37 billion in 2024, and is expected to reach USD 142.56 billion by 2029, growing at a CAGR of 11.06% (20242029).
Growth Drivers
- 100% Foreign Development Investment (FDI) allowed under automatic route in the packaging sector.
- Driven by the growth of allied industries such as consumer goods, pharmaceuticals, food processing, manufacturing industry, FMCG, healthcare etc.
- Initiatives to promote the use of LNG & CNG by the government such as rapid expansion of gas infrastructure including natural gas grid, liquefied natural gas (LNG) import terminals and city gas distribution (CGD) network in the country.
Peer Analysis
Competitors: Supreme Industries Ltd
Compared to its competitor, Time Technoplast is undervalued with a consistent growth in revenue and stable returns from the capital invested capital.
Outlook
The company has given a revenue growth guidance of 15% for the next 2-3 years. It has set aside a capex allocation of Rs.180 to Rs.200 crore for FY25. The company aspires to be the largest composite product company in the country. It has a pipeline of high business potential products for launch. The new products are expected to improve margins and earnings potential. It is also undertaking automation and reengineering initiatives in its existing facilities to increase productivity with a subsequent reduction in in cost. It is also targeting to increase the share of value-added products from current 27% to 35% in the next 2-3 years. The company aims to become a debt-free company by FY26. It is maintaining a strong balance sheet with net cash balance of Rs.902 crore (as of Q2FY25).
Valuation
We expect the company to sustain its growth momentum given its first mover advantage backed by strong execution capabilities. We recommend a BUY rating in the stock with the target price (TP) of Rs.526, 23x FY26E EPS.
Risk
- Launch of new products – Delay in the launch or failure of new products could impact profitability.
- Change in regulatory environment – The company operates in an industry with stricter regulatory environment (e.g., restrictions on the use of plastic), which could affect its operations.
Note: Please note that this is not a recommendation and is intended only for educational purposes. So, kindly consult your financial advisor before investing.
Recap of our previous recommendations (As on 17 January 2024)
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