Hold Time Technoplast; target of Rs 70: ICICI Direct

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ICICI Direct's research report on Time Technoplast

Time Technoplast reported ~11% YoY growth in Q1FY20 revenue (I-direct estimate: 13%) supported by moderate growth of 10% in the plastic business (contributes ~71% in topline). The value added product category (contributes ~21% in topline) grew ~14% YoY led by ~21% growth in the revenue of composite cylinder. Despite a strong order book (of Rs 350 crore), the piping business faced challenges due to slowdown in industrial activity. The management has guided for strong revenue traction from the composite cylinder, pipes and mox films businesses in the quarters to come due to good order book position. While gross margin in Q1FY20 declined marginally on account of a change in product mix, the management guided for a revival in margin for FY20 supported by rising contribution of valued added products in sales. A slow pick-up in industrial activity coupled with rising contribution of pipes business would weigh on revenue and profitability of the company. We cut our revenue, earning estimate by 2%, 12% for FY20E and 3%, 13% for FY21E, respectively.

Outlook

We maintain our stance on the stock with HOLD rating and value the stock at FY21E 4x EV/EBITDA with revised target price of Rs 70/share.

For all recommendations report, click here

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