Buy Time Technoplast; target of Rs 145: Kotak Securities

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Kotak Securities’ research report on Time Technoplast

Time Technoplast reported weak numbers for the quarter as increase in commodity prices and INR depreciation led to decline in gross margins. Increase in cost of borrowings aided to decline in profits. Volume growth was at 11% during Q2FY19 with the Indian and overseas markets growing at 11% and 12% respectively in volume terms. Although at the start of the fiscal, the company had planned for 15% growth in volumes, but considering the slippage in growth in H1FY19, the management is now guiding for 12-13% volume growth. The company has taken price increases for its products, this along with the recent softening in HDPE prices should result in bounce back in EBITDA margins, the management indicated.


At CMP, TTL is trading at P/E of 12.8x and 10.1x 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 general sell-off in the midcaps and smallcaps universe. At the current price, valuations are attractive. Hence, we continue to maintain our positive stance on the company. We value the stock at 13x FY20 earnings and arrive at a price target of Rs 145 (Rs 195 ealier, based on 15x FY20E).