Shares of the world’s largest manufacturer of large-size plastic drums surged nearly 0.6 percent on BSE to hit an intraday high at Rs. 396.65 in the trading session of Wednesday.
With a market cap of Rs. 8,407.7 crores, the shares of Time Technoplast Limited closed in the red at Rs. 370.5, down by nearly 6 percent, as compared to its previous closing price of Rs. 394.3.
Management Outlook based on Trade Brains’ Analysts Q&A
During the recent conference call of Data Patterns held on 12th November, analysts from Trade Brains asked a few insightful questions to the management. Here are the details:
(i) In the presentation, it was mentioned that the company will now focus on increasing the share of value-added products in its revenue and improving margins. So I want to understand what are your plans to achieve this and what kind of margins are you expecting from this? What percentage of the QIP is the company going to allocate for the purpose?
The Board had approved the raising of funds via QIP of up to Rs. 1000 crores. Of this amount, around 50% will be allocated toward the development of value-added products, while the remaining 50% will be used for brownfield expansion of the existing products.
The brownfield expansion will focus on the company’s existing products, while the major expansion—both in India and internationally—will be centred around value-added products. These include Composite Cylinders (LPG, Oxygen & CNG), Intermediate Bulk Containers (IBC) and MOX Films.
Additionally, the company sees significant potential in hydrogen cylinders, following CNG, and has already received approval. Further, the company will enter into the drone industry and is currently exploring new applications involving the use of cylinders in drones, an area that is receiving increasing attention from the government.
Drones are being utilised more widely in agriculture and surveillance, and while they currently rely on batteries, the use of cylinders could significantly enhance their performance.
With cylinders, drones could achieve up to four times the flight capacity compared to battery-powered models. As a result, the management anticipates that drones using cylinders with its products will soon be adopted, pending final approval.
Looking ahead, the company expects a 30% YoY growth in value-added products over the next three years, while for existing products, the company projects a 10-12% YoY growth in the same time frame. Moreover, combining the growth from both segments, the company anticipates an overall average YoY growth of around 15%.
(ii) What is the capex planned by the company for H2 and FY26? Also, what kind of growth are you expecting in volumes and value in the same period?
The management expects a 15% volume growth in sales, with revenue growth projected to range between 10% and 20%. The volume growth will be influenced by the pricing of composite products and polymer prices, which are linked to market demand and supply dynamics.
Regarding capital expenditure (capex), the company anticipates expenditure between Rs. 180-200 crores in FY25. Of this, approximately Rs. 95 crores has already been incurred in the first half of FY25. After accounting for the disposal of non-core assets, the net capex for FY25 is expected to be in the range of Rs. 125-130 crores.
Product Portfolio & Performance
The company’s product portfolio is categorized into Established Products and Value Added Products. The Established Products segment includes HM-HDPE plastic drums/jerry cans and pails, polyethylene (PE) pipes, turf and matting, disposable bins, energy storage devices, auto products, and steel drums.
The Value Added Products segment consists of Intermediate Bulk Containers (IBC), composite cylinders (LPG, oxygen, and CNG), and MOX films.
In Q2 FY25, the Established Products segment generated revenue of Rs. 980.6 crores, up from Rs. 871.6 crores in Q2 FY24. Meanwhile, the Value Added Products segment contributed Rs. 391 crores, compared to Rs. 323 crores in the same quarter last year.
For H1 FY25, value-added products saw a 20% YoY growth, while established products grew by 13%. The company’s strategic focus is to increase the share of value-added products in its revenue mix, thereby improving margins.
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Management Guidance
The company plans to invest the funds raised via QIP worth Rs. 1,000 crores for the expansion of both greenfield and brownfield projects focused on value-added products, with a focus on value-added products.
Additionally, capital expenditures will be directed towards automation, reengineering, and modifications of molds, machinery, and equipment, aimed at reducing recurring costs and improving margins.
The Board reviewed the status of the proposed sale of a 50% stake in the UAE business to a financial investor. After considering factors such as the Middle East market conditions, the company’s debt-free growth strategy
(targeting 15% annual growth), and the ongoing QIP, the Board decided not to move forward with the sale.
Additionally, the Board approved the consolidation of the company’s product portfolio and manufacturing units, both in India and internationally. This includes the addition of new locations and brownfield expansions to better align with market demand and optimise costs.
Management has set a target to increase Return on Capital Employed (ROCE) by 2% annually. Furthermore, the company has pre-existing approvals for the production of LPG, CNG, Oxygen Cylinders, and Hydrogen Cylinders.
The development of technologically advanced Transparent Container Batteries (TBS) and E-Rickshaw batteries, in both Lead Acid and Lithium formats, is underway through the company’s subsidiaries—NED Energy Limited and Power Build Batteries Pvt. Ltd—with development taking place at the existing production facilities. TBS is expected to be launched in Q4 FY25.
Financials
The company reported a significant growth in revenue from operations, experiencing a marginal year-on-year increase of nearly 14.8 percent, rising from Rs. 1,194.2 crores in Q2 FY24 to Rs. 1,370.5 crores in Q2 FY25.
Likewise, during the same period, the company’s net profit increased from Rs. 71.5 crores to Rs. 99.8 crores, representing a growth of around 40 percent YoY.
Stock Performance
The stock has delivered multibagger returns of nearly 115.2 percent in one year, while around 40.5 percent of positive returns in the last six months. So far in 2024, the shares of Time Technoplast have given multibagger returns of about 100.2 percent.
About the Company
Time Technoplast Limited is mainly involved in the business of manufacturing technology and innovation-driven polymer and composite products.
The company has a dominant market position with over 55% market share in domestic industrial packaging and is the world’s largest manufacturer of large-size plastic drums. The company is a market leader in 9 out of 11 countries it operates in.
Time Technoplast is the first company to launch Intermediate Bulk Container (IBC) in India and the third largest IBC manufacturer worldwide. It is a major player in the manufacturing of HDPE pipes in India and is the second-largest MOX film manufacturer in India.
Written by Shivani Singh
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