Buy Time Technoplast, target price Rs 84: ICICI Securities

ICICI Securities has given a buy rating to Time Technoplast with a target price of Rs 84. The share price moved up by 3.90 per cent from its previous close of Rs 37.20. The stock’s last traded price is Rs 38.65.

Time Technoplast Ltd., incorporated in the year 1989, is a Small Cap company (having a market cap of Rs 875.19 Crore) operating in Packaging sector.

Time Technoplast Ltd. key Products/Revenue Segments include Plastic Products which contributed Rs 2462.05 Crore to Sales Value (100.00 % of Total Sales)for the year ending 31-Mar-2019.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 475.20 Crore, down 48.13 % from last quarter Sales of Rs 916.14 Crore and down 45.26 % from last year same quarter Sales of Rs 868.14 Crore. The Company reported net profit after tax of Rs -11.59 Crore in latest quarter.

Investment Rationale
The brokerage expects TIME’s revenue/EBITDA/PAT to grow at CAGR of 1.3%/3.3%/6% over FY20-FY22E, respectively. The major overhang for TIME's benign valuations it believes is the market's concerns on 1) its sustained capex drive to the tune of Rs2-2.5bn p.a., 2) Higher debt on books, 3) capital allocation woes and 4) promoters pledge. With some of these issues likely to be addressed by the company in the form of: 1) lower capex to the tune of Rs1-1.5bn p.a. over the next two years, 2) likely debt repayment driven by higher FCF generation and selling of non-core assets and 3) revocation of pledge, it assigns a 10x PE multiple to TIME and arrive at a target price of Rs 84.

Promoter/FII Holdings
Promoters held 51.3 per cent stake in the company as of December 31, 2019, while FIIs held 17.2 per cent, DIIs 10.4 per cent and public and others 21.1 per cent.