Buy Time Technoplast; target of Rs 128: Kotak Securities

Kotak Securities' research report on Time Technoplast

Time Technoplast (TTL) reported weak set of numbers in Q2FY19 as firm raw material prices (HDPE) eroded margins. However, we note that HDPE prices have corrected in recent weeks, thereby, we believe there is a case for margins to bounce back to normal levels. We reiterate BUY. The management expects revenue growth of 15% and modestly higher EBITDA margins in FY20 aided by increasing share of value-added products. At CMP, TTL is trading at P/E of 12.4x and 9.4x FY19E and FY20E earnings respectively, which is attractive as it is at a discount to midcap index valuation. In recent months, the TTL stock has been derated in line with 1) general sell-off in the midcaps and smallcaps universe 2) Weak Q2FY19 results and 3) concerns on promoter stake sales. At the current price, valuations are attractive. Hence, we continue to maintain our positive stance on the company.

Outlook

We value the stock at 12x FY20 earnings and arrive at a price target of Rs 128 (Rs 145 ealier, based on 13x FY20E).