We recommend ?BUY? on TIME TECHNOPLAST LTD for a target of INR 111 – valuing the company at P/E 10x of FY20E Earning.?
CMP: INR 95
Target Price: INR 111
Investment Rationale:
- Leading producer of rigid industrial packaging products and offer a wide range of rigid products i.e. HM-HDPE drums, Jerry-cans, Pails and Intermediate Bulk Containers (IBCs).
- The principal raw materials for Time Technoplast?s businesses is olyethylene (HDPE) granules. HDPE Prices is the key raw material for the company.
- Better utilisation, stable raw material prices to help drive profitability.
- World Wide Presence.
- Time tech group operates in more than 30 Production facilities across the Globe and is recognized for its innovative plastic products.
- Time Technoplast focuses on maintaining and establishing long-term relationships with customers.
- Ability to address the varied and expanding requirements of its customers over long periods.
- Trained team of marketing and sales personnel. Servicing over 900 institutional clients.
Valuations And View:
Time Tech has set itself apart from its competition by focusing on research and development, futuristic product designing, superior customer service by setting up 28 manufacturing units & 8 regional and marketing offices to meet the growing demand of Indian customers & further to fill the need gap for global customers. We value the business at 10x FY20E EPS and recommend a BUY rating on the stock with a target price of INR 111 per share.
Risk & Concerns
- Political, social, economic and labor instability which has commonly been associated with developing countries.
- War, invasion, civil disturbance or acts of terrorism;
- Changes in government policies and regulations;
- Imposition of limitations on conversions of currencies into United States dollars or remittance of dividends and other payments by overseas subsidiaries;
- Imposition or increase of withholding and other taxes on income remittances and other payments by international subsidiaries;
- Hyperinflation, currency devaluation or defaults in certain countries;
- Restrictive governmental trade policies, customs, import/export and other trade compliance regulations.
Company Background
Time Technoplast Ltd (TTL or the subject company) incorporated in India is a multinational conglomerate involved in the manufacturing of technology and innovation driven polymer & Composite products. Time Technoplast Ltd (Time Tech) is a multinational conglomerate with operations in Bahrin, Egypt, Indonesia, India, Malaysia, U.A.E, Taiwan, Thailand, Vietnam & Saudi Arabia is a leading manufacturer of polymer products. The company?s portfolio consists of technically driven innovative products catering to growing industry segments like, Industrial Packaging Solutions, Lifestyle Products, Automotive Components, Healthcare products, Infrastructure / Construction related products, Material Handling Solutions & composite cylinders. Time Tech group operates more than 30 production facilities across the globe and is recognized for its innovative plastic products.
Since its inception in 1992, Time Tech has set itself apart from its competition by focusing on research and development, futuristic product designing, superior customer service by setting up 28 manufacturing units & 8 regional and marketing offices to meet the growing demand of Indian customers & further to fill the need gap for global customers. Time Tech is promoted by qualified professionals with decades of experience who believe in working hard for the company, its customers, its suppliers, its employees and its shareholders.
PRODUCTS:
- IBC
- Mox Films
- Composite cylinder
- Industrial Packaging
- Infrastructure Products
- Automotive Components
- Lifestyle Products
- Material Handling
Industry Overview
India?s plastics industry is one of the biggest in the world. Industry volumes are estimated at 16MMTPA (in FY17), with market size at INR 1.8 Tn. In volume terms, the industry has grown at a CAGR of 10% over FY10-17 and is expected to grow at a CAGR of 10.5% to 22MMTPA by FY20. However, in value terms, the plastics industry has grown at a CAGR of 11% over FY10-17. The rapid growth can be ascribed to substitution of other materials, low cost and high product-to-package ratio, shifting consumer lifestyles, higher middle-class population and rising per capita income and growth of the organized retail market.
Asia-Pacific region is estimated to record fastest growth in terms of rising industrialization. Increased demand is characterized by quick adoption of technological advancements, rising volume of OEMs which drives the competitors to reduce the cost per package and provide sustainable products. Moreover, low labor cost, huge scope for FDI and stable growth in industries such as automotive, construction and healthcare will impact positively for industry growth in this region.
