Time Technoplast - Impressive performance - ICICI Securities

Time Technoplast (TTPL) reported better than expected PBT at Rs304mn (I-Sec: Rs160mn), down 43% YoY largely led by beat in revenues at Rs7.44bn (I-Sec: Rs6.79bn), down 14.6% YoY. Revenue beat was led by faster recovery in VAP segment with a decline of 10.3% YoY. EBITDA margin at 12.4% (I-Sec: 12%) was down 150bps YoY led by superior mix while gross margin was down 70bps YoY. Shift of chemicals business from China to other Asian countries for its packaging business, continuous improvement in VAP mix, new product opportunities in CNG cascade business along with selling of non-core assets and revocation of pledge is likely aid rerating in the stock going forward. Maintain BUY. Key risks to upside: sustained higher capex and capital allocation.

- Valuation and outlook: Factoring-in the Q2FY21 performance, we increase our revenue and earnings estimates by 5% and 40% for FY21E while FY22E estimates remain unchanged. We now expect TTPL to report revenue and PAT CAGRs of 1.3% and 6% respectively over FY20-FY22E. We maintain our rating on the stock at BUY with an unchanged target price of Rs84, valuing it at 10x FY22E earnings.

- Revenues down 14.6% YoY led by VAP decline of 10.3% and established products decline of 15.7% YoY. TTPL reported 14.6% YoY decline in revenues to Rs7.44bn (I-Sec: Rs6.79bn). This was largely due to faster recovery in VAP revenues with a decline of 10.3% YoY while established products declined 15.7% YoY. Under VAP, composite cylinder / IBC / MOX declined by 9% / 12% / 9% YoY respectively. Established products segment was dragged down by the pipes business declining by 43% YoY while packaging products was down 12% YoY. With strong orderbook in pipe segment and new opportunities in packaging, the company expects established products demand to recover in FY22E. We expect TTPL to report a revenue CAGR of 1.3% over FY20-FY22E.

- EBIDTA margin at 12.4% (I-Sec: 12%), down 150bps YoY, led by superior product mix. EBIDTA margin came in at 12.4% (I-Sec: 12%), down 150bps YoY, led by superior product mix with lower decline in VAP revenues. Gross margins were down 70bps/130bps YoY/QoQ respectively. Although Q2FY21 saw a steep polymer price increase, the benefit of inventory gains is likely to happen in Q3FY21. However, savings in some of the fixed costs restricted the fall in margins for the quarter. Going forward, we expect EBITDA margin to rebound to 14.5% by FY22E on the back of operating leverage, cost-saving initiatives and higher VAP mix.

- PBT down 43.3% YoY to Rs304mn (I-Sec: Rs160mn). TTPL posted better than expected PBT of Rs304mn (I-Sec: Rs160mn) driven by better than expected operational performance and lower interest and depreciation costs. TTPL reported PAT at Rs258mn, down 35.5% YoY.

Shares of TIME TECHNOPLAST LTD. was last trading in BSE at Rs.41.6 as compared to the previous close of Rs. 40.85. The total number of shares traded during the day was 78628 in over 584 trades.

The stock hit an intraday high of Rs. 41.85 and intraday low of 40.65. The net turnover during the day was Rs. 3245593.

Source : Equity Bulls

Keywords