'Buy' Time Technoplast Shares Maintains Motilal Oswal On Robust Outlook

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Motilal Oswal Report

During FY21-25, Time Technoplast Ltd. recorded a CAGR of 16%/19%/39% in revenue/Ebitda/PAT, with a 14.4% Ebitda margin (up 150bp). We now estimate a CAGR of 15%/16%/23% over FY25-28, with ~15% Ebitda margin.

Our robust outlook is backed by moderate but stable growth in Established Products (12% revenue CAGR, ~13% Ebitda margin), alongside strong anticipated performance in value-added-product (20% revenue CAGR, 18%+ Ebitda margin).

Despite annual capex of ~Rs 1.7 billion, we expect Time Technoplast's pre-tax return on capital employed/return on invested capital to expand from 18.2% each in FY25 (FY24: 16%-17) to ~23%/26% in FY28 on:

1. healthy operating results,

2. better efficiency (sales/gross-block to rise from 1.6x in FY25 to 2.1x in FY28E), and

3. tightening of working capital cycle (down by 15 days over FY25-28).

It expects to use an estimated ~Rs 4 billion annual operating free cash flow to pare debt and turn net cash in FY27, from net debt of ~Rs 6 billion in FY24 (FY25: Rs 4.7 billion).

Considering its strong growth prospects, improving return ratios, and attractive valuation (~17x FY27E P/E), we reiterate Buy on Time Technoplast with an unchanged target price of Rs 578, based on 22x FY27E P/E (close to sector average).

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