ICICI Direct - Company Update - Time Technoplast

Time Technoplast has received an order of ~Rs. 42 crore for the supply of CNG cascade Type-IV gas cylinders from one of the leading gas distribution companies in India. The current order book for CNG Cascade is at ~Rs. 53 crore. While the current industry size is pegged at ~Rs. 600 crore, the company sees the industry size more than doubling in the next two years on account of rising interest of CNG distribution companies in CNG cascades compared to metal cylinders. This, along with the company's restructuring plan to sell its non-core business (battery and other small business), and a substantial reduction of pledge equity by the promoter company (reduced from 17.8% to 4.2% in last eight months), increases our confidence on a better performance from the company from FY22E onwards. While we model earnings CAGR of ~16% for FY20-23E, we upgrade our rating on the stock from HOLD to BUY by ascribing 4.3x EV/EBITDA FY22E EBITDA.

Valuation & Outlook

We believe an improved product mix would help drive EBITDA margin while a marginal debt reduction via positive CFO would keep overall D/E below 0.5x. We upgrade our rating on the stock from HOLD to BUY with a revised target price of Rs. 75 (valuing at 4x EV/EBITDA FY22E, earlier TP: Rs. 58).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TimeTechno_CoUpdate_Apr21.pdf

Shares of TIME TECHNOPLAST LTD. was last trading in BSE at Rs.65.45 as compared to the previous close of Rs. 62.05. The total number of shares traded during the day was 321471 in over 2211 trades.

The stock hit an intraday high of Rs. 66.5 and intraday low of 60.55. The net turnover during the day was Rs. 20521196.

Source : Equity Bulls

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