Buy Time Technoplast; target of Rs 100: ICICI Direct
ICICI Direct is bullish on Time Technoplast recommended buy rating on the stock with a target price of Rs 100 in its research report dated Jun 01, 2021.
June 10, 2021 / 12:21 PM IST
ICICI Direct's research report on Time Technoplast
Time Technoplast (TTL) reported strong bottomline growth of 40% YoY in Q4FY21 led by improved EBITDA margin (up 63 bps YoY) and 9% YoY drop in interest outgo (gross debt fell 11% YoY in FY21). On the topline front, TTL’s topline growth was at ~4% YoY led by 7% growth in the value added product categories. For FY21, value added products (~20% of topline) recovery was faster at 87% vs. 83% business recovery in the established product segments. Overall revenue recovery was 84% of its pre-Covid level. In the short-term, business recovery will be again challenged by lockdown related demand disruptions in Q1FY22. Hence, we revise our revenue, PAT estimates downward by 5%, ~12%, respectively. However, the management sees a significant growth opportunity in the next four to five years led by newly introduced CNG cascade/on-board/oxygen cylinders. TTL has received all necessary approvals for its Cascade and On-board CNG cylinders. These are value product categories with EBITDA margin profile higher by 100-200 bps vs. company level margins. On the balance sheet front, FY21 debt was down 11% to Rs 677 crore as debt was repaid through improved cashflow from operations (CFO up 18% YoY).
We introduce our FY23 estimates and model revenue CAGR of 16% in FY21- 23E on a favourable base and new launches. We believe improved product mix would help drive EBITDA margin, going forward, which will drive PAT at CAGR of 50%. We maintain BUY rating on the stock with a revised target price of Rs 100 (valuing at 6x EV/EBITDA FY22E, earlier TP Rs 75).
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