Hold Time Technoplast; target of Rs 43: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Time Technoplast

Time Technoplast reported an improved QoQ performance in Q2FY21 and ~85% sales recovery YoY. Despite sporadic lockdowns in domestic, international markets the volume recovery was at 87% of the same period last year. The domestic segment volume recovery was 88% while overseas business volume recovery was at 87% YoY. On the product front, composite cylinder and plastic business (i.e. industrial packaging) segments saw a relatively better recovery at 91% and 88% YoY, respectively, while piping segment sales recovery was delayed due to slow execution of government orders. The management commentary suggests an accelerated recovery in H2FY21 post ease in lockdown restrictions and better labour availability. On the profitability front, lower operating leverage weighed on EBITDA margin, which fell ~155 bps YoY to 12%. We believe improved plant utilisation would further help a better EBITDA margin, going forward. This, along with the company’s focus on debt reduction (through improved cash flow operations) is encouraging, which led to saving in interest cost by ~12% YoY in Q2FY21. We believe a recovery in economic activity would help drive revenues, EBITDA margin from FY21E onwards. We also expect a rationalisation of capex plans coupled with comfortable D/E (0.4x in FY20) to help the company to pass through the challenging phase in FY21E.

Outlook

We believe improved demand in H2FY21 along with focus on increasing contribution of value added products would help better profitability, going forward. Further, marginal debt reduction via positive CFO would keep overall D/E below 0.5x. We maintain HOLD rating on the stock with a revised target price of Rs 43 (valuing at 3x EV/EBITDA FY22E).

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