Time Technoplast: PAT growth of 41% & Revenue growth of 14% in Q1-25 at a PE of 27
Revenue CAGR of 15% for FY24-27. Bottom line to grow faster than the top-line as contribution of value added production expected to increase from 25% in FY24 to 35% by FY27
1. Industrial Packaging Company
timetechnoplast.com | NSE : TIMETECHNO
World’s largest manufacturer of large size plastic drums
3rd Largest Intermediate Bulk Container (IBC) manufacturer worldwide.
Major Player in manufacturing of HDPE pipes in India
2nd largest MOX film manufacturer in India
2nd Largest Composite Cylinder manufacturer worldwide.
Products
Business Segments
2. FY20-24: PAT CAGR of 16% & Revenue CAGR of 9%
3. FY23: PAT up 17% & Revenue up 18% YoY
4. Strong FY24: PAT up 42% & Revenue up 17% YoY
5. Strong Q1-25: PAT up 41% & Revenue up 14% YoY
6. Business metrics: Improving return ratios
Return on Capital Employed – Q1FY25 : 15.9%
Focus on increasing ROCE by 2% annually
Achieving an RoCE of ~20% over the next 2 years
7. Outlook: 15% revenue CAGR for FY24-27 with PAT growing faster
i. 15% revenue growth in FY24-27
Revenue growing to Rs 7,500 cr by FY27 implies a revenue CAGR of 15%
Last year revenue we did around INR5,000 crores. So definitely, three years we would like to have. I can say the revenue around INR7,500 crores.
ii. Bottom lime to grow much faster than top-line FY24-27
EBITDA Margin expected to expand from 14.2% as Q1-25 to 15.5%+ by FY27
Value added sales is around 25%. In 3 years down the lines we are projecting it will be 35%
Current has achieved 14.2%. We can definitely achieve the 3 years down the line, maybe 15.5% from there or even above that.
iii. Value unlocking: Sale of Middle East business & non core assets
Proceeds from stake sale will reduce debt and reduce return ratios.
Disinvestment of Middle East 50% business is in progress and is estimated to be completed in the next 45 – 60 days’ time including receipt of sale proceeds, Due Diligence on the same is complete, and other legal work is on.
9. PAT growth of 41% & Revenue of 14% in Q1-25 at a PE of 27
10. So Wait and Watch
If I hold the stock then one may continue holding on to TIMETECHNO
TIMETECHNO delivered a strong FY24 followed by an excellent Q1-25 where bottom-line performance has been quite strong. Increased confidence in the management to deliver top-line growth of 15% with margin expansion that FY24 targets were achieved.
Margin profile of TIMETECHNO expected to improve and drive faster PAT growth with increasing contribution of value added products and reduction in interest cost as it reduces its debt. We can stay in as long as the value addition story plays out.
Substantial EBITDA margin increase which is currently 14% to 16%
Goal of becoming debt-free in 2-3 years.
11. Or, join the ride
If I am looking to enter TIMETECHNO then
For a PAT growth of 41% on a revenue growth of 14% in Q1-25, the PE of 27 looks acceptable.
TIMETECHNO is guiding for 15% revenue growth in FY25 with PAT expected to grow faster than the revenue at a PE of 27 which makes the valuations acceptable in the short term.
TIMETECHNO is guiding for FY24-27 revenue CAGR of 15% with EBIDTA margins expanding from 14.1% to 15.5%+ at a PE of 27 which makes the valuations reasonable in the short term.
TIMETECHNO generated Rs 225.53 cr free cash flow in FY24. It is quoting a market cap of Rs 8951 cr. It is available at free cash flow yield of 2.5% which makes the valuations acceptable. FY25 should also deliver free cash flow generation
Net cash from operating activity in the quarter more than INR67 crores.
Capex incurred in the quarter 1 was INR39 crores
If the thesis of increased contribution of value added product which will drive bottom line growth higher than the top line is not delivered then it may not sustain current valuations.
Previous coverage of TIMETECHNO
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