Hold Time Technoplast; target of Rs 110: ICICI Direct

ICICI Direct's research report on Time Technoplast

Time Technoplast’s Q4FY19 performance was ahead of our estimate with revenue growth of ~15% YoY (I-direct estimate: 12%) supported by 4x jump in sales of piping business. The established product category (plastic division and PE Pipes) increased ~15% YoY led by strong government demand in the piping segment. Value added product (VAP) category grew ~18% YoY led by strong growth in the composite cylinder category. Gross margin remained under pressure mainly on account of a sharp rise in contribution of low margin products in the topline. However, EBITDA margin was higher at 15.7% (I-direct estimate: 14.7%) mainly due to saving in other expenditure. PAT growth came on the back of flattish depreciation (due to change in working of depreciation) and saving in tax outgo during Q4FY19. The management reiterated topline growth of ~15% but margin would remain in the range of ~14-15% owing to rising contribution of PE pipes.

Outlook

We roll over our valuation on FY21E and value the stock at FY21E 5x EV/EBITDA. We maintain HOLD on the stock with a revised TP of Rs 110/share.