IT'S TIME TO ADD THIS STOCK TO YOUR PORTFOLIO
HERE IS WHY Diversified market presence Robust demand in high profit segments Healthy cash flow
Time Technoplast Limited (TTL) is a leading manufacturer of polymer products with operations in India, Bahrain, Egypt, Indonesia, Malaysia, Sharjah, Taiwan, Thailand and Vietnam. With its 28 manufacturing units and 10 marketing offices, TTL has become the market leader in 8 out of the 9 countries in which it operates. TTL’S consolidated revenue grew at a CAGR of 13.7 per cent from ₹1,275.7 crore to ₹2,754.6 crore during FY11-17.
TTL'S portfolio consists of growing industry segments like industrial packaging solutions, lifestyle products, automo- tive components, healthcare products, construction-related products, material handling solutions and composite cylinders. Its distribution network is spread over 345 cities. In FY17, the company’s plastics segment and composite cylinders generated 77 per cent and 3 per cent of the revenues, respectively, whereas intermediate bulk containers (IBC) and pipes generated 11 per cent and 9 per cent revenues, respectively. All of its segments have witnessed high growth; for instance, composite cylinders have an order book of close to 2.5x its current capacity.
The company plans to expand its capacities for composite cylinders, HDPE pipes and DWC pipes and also foray into MOX films. In the short term, this will impact the company’s working capital cycle. The company has enough cash in hand to repay its long term debts. It might see an increase in its short term borrowings required for its business expansion plans. However, we do not expect this to have a significant impact on the financials.the technological capabilities of TTL are at par with its global peers like Mauser, Schutz & Greif. This provides TTL immunity from competitive cannibalisation in the markets where it has a strong presence.
On the financial front, TTL posted 9.04 per cent increase in its standalone revenue to ₹378.38 crore in Q1FY18 from ₹347.01 crore in Q1FY17. The company’s PBDT increased 15.32 per cent to ₹44.84 crore in the first quarter of FY18 on a yearly basis. The company’s net profit rose 4.54 per cent to ₹18.17 crore for the corresponding period. On an annual basis, the company’s standalone revenue rose 13.42 per cent to ₹1,596.14 crore in FY17 compared to the previous fiscal. The company’s PBDT rose 44.03 per cent to ₹193.32 crore in FY17 from ₹415.64 crore in FY16. The company’s net declined from ₹99.15 crore in FY16 to ₹94.90 crore in FY17, registering 4.28 per cent decline.
On the valuation front, the share price of TTL is currently trading at PE ratio of 29.64x. The company’s ROE and ROCE stood at 11.887 per cent and 14.86 per cent, respectively. The scrip has witnessed a change of 110.30 per cent in the last one year.
We expect the profitable segments-mox film and composite cylinders-to drive the company’s future growth and influence margins positively. The plastics segment (77% of total revenues) is also expected to have stable operations with high free cash flow generation. We recommend our reader-investors to BUY the stock.