𝗟𝗼𝗻𝗴 𝗧𝗲𝗿𝗺 ®™

Time Technoplast Ltd 120-180 Expected level 220 Support 100

Key risks & concerns  Sourcing of raw materials is an important part of TIME’s business, as they constitute over 70% of the company’s revenue. Polyethylene (PE) granules, produced from oil and natural gas, are an essential raw material across all its business divisions. The company imports most of these granules from neighboring countries, with the rest from local manufacturers. Its procurement is mostly through open market purchases or both short- and long-term supply contracts. As the global market for recycled plastics evolves, TIME expects the demand for virgin polyethylene to increase. Countries such as China, India, Vietnam, Indonesia, the US, and those in Europe are significantly investing in recycling, which is expected to sustain overall demand in the long term.  TIME has developed many products that are first in the country and face regulatory risks. These products include composite LPG and CNG cylinders, having been exposed to government regulation. While a part of the investments is upfront, revenue is earned only gradually, once the markets for these products evolve. Thus, failure in the pickup of these products could hamper the company’s financials.  TIME is exposed to polymer price fluctuations, which are deterministic on the supply and demand situations in Indian and international markets. Polymers are crude derivatives that mostly trail crude prices. Volatility in crude prices could have a bearing on the company’s financials.  TIME’s business is exposed to foreign exchange fluctuations, as 34% of its revenue (~INR19b) came from overseas markets in FY25. Apart from currency fluctuations, import/export regulations, customs procedures, and changes in government policies and regulations are other factors that could impact the company’s business performance. However, TIME has mitigated some of these risks by setting up manufacturing plants in 11 countries (including India) to serve the local demand in those countries.

Valuation and view Robust outlook; initiate with BUY  Over FY21-25, TIME recorded a CAGR of 16%/19%/39% in revenue/EBITDA PAT, with EBITDA margin of 14.4% (up 150bp during the period). We now estimate a CAGR of 15%/16%/23% over FY25-28E with EBITDA margin expanding to ~15%.  Our robust outlook is backed by moderate but stable growth in the established products segment (12% revenue CAGR, 13-14% EBITDA margin) and an anticipated strong results in VAP (20% revenue CAGR, 18%+ EBITDA margin).  Considering its strong growth prospects, improving return ratios and attractive valuation (~16x FY27E P/E), we initiate coverage on TIME with a BUY rating and a TP of INR578 (41% upside), based on 22x FY27E P/E (close to sector average).

Revenue

EBITDA Margin

Financial performance

Asset monetization, business restructuring and cost reduction measures to improve operational efficiency and strengthen balance sheet  TIME is in the process of monetizing a few non-core and non-performing assets in India, restructuring its business and reducing costs.  With a greater focus on high margin VAPs, the company has identified assets to monetize worth INR1.25b, of which assets worth INR740m were already monetized in the last two years and the balance would be done in FY26.  It also plans to divest its stake in NED Energy, a subsidiary company, in the future once it achieves a decent scale.  As part of business restructuring, TIME aims to consolidate operationally inefficient small manufacturing units into nearby large units to enhance their efficiency levels.  On cost reduction, it plans to install solar panels at manufacturing plants in many states to reduce its power and fuel costs by over INR250m annually.  Being a large user of polymer as its raw material, TIME is also exploring options to set up polymer recycling plants in all regions, starting from the west, at INR1.2b capex for efficient RM sourcing.  These initiatives will help TIME improve its operational efficiency and drive superior RoCE and cash flows.

High focus on value-added composite products having strong growth potential and margins  VAP is a high-growth (20-30% CAGR), high margin (18%+) business for TIME.  The company's VAP basket mainly consists of IBC (~13% of total revenue), composite cylinders (LPG domestic, CNG cascades; ~11% of total revenue), and MOX films (cross-laminated film; ~3% of total revenue).  TIME was the first company to launch IBC in India and is the 3rd largest IBC manufacturer worldwide.  It is also the first company to have launched Type-IV composite cylinders for LPG and CNG in India and is the 2nd largest composite cylinder manufacturer globally.  Management believes the composite cylinder business holds significant potential with wide-ranging applications across various industries. To tap into this opportunity, the company is constantly evaluating new products with strong revenue-generating potential.  In FY25, the VAP segment contributed 27% to total revenue, which the company aims to increase to 35% over the next three years (at 20-25% CAGR), likely outpacing the growth in the established products segment (~12% CAGR).  The rising revenue mix of VAP would augur well for TIME's overall margins.

Long-standing relationships with marquee customers for global supply TIME’s long-term relationships with several global Fortune 500 companies have enabled it to capture a significant share of their business worldwide. For instance, TIME has maintained a 16-year relationship with Dow Chemicals, catering to 70% of its packaging product requirements across seven countries, including India, Thailand, Taiwan, Vietnam, Bahrain, KSA, and UAE. TIME has a diversified end-user base (no single customer accounts for 5% of total revenue), with significant revenue coming from specialty chemicals and non-cyclical sectors (FMCG, F&B, and paints). These factors enable TIME to steadily grow its volume in the 8-12% range in its Established Products segment (75% revenue mix), while maintaining an EBITDA margin of 12-14%, even amid a volatile environment.

TIME technoplast is the world's largest manufacturer of largesize plastic drums, with an impressive 50-60% market share in India and a significant share in 10 other countries. It was the first company to launch intermediate bulk containers (IBC) in India and is now the third largest IBC manufacturer worldwide. Additionally, TIME ranks as the second largest global manufacturer of Type-IV composite LPG and CNG cylinders.  We are optimistic about its value-added composite products (LPG and CNG cascade cylinders), stable and long-standing industrial packaging (drums, jerry cans, IBC etc.) business, and focus on improving financials to turn net debt-free over the next 1-2 years.  After clocking a CAGR of 16%/19%/39% in revenue/EBITDA/PAT over FY21-25, we estimate a CAGR of 15%/16%/23% over FY25-28E, led by strong performance in its value-added product (VAP) segment (20% revenue CAGR, 18%+ EBITDA margin) and strong cash flow generation. Asset monetization, business restructuring, and cost reduction measures will improve operational efficiency and strengthen the balance sheet.  Despite annual capex of ~INR1.7b, we estimate pre-tax RoCE/RoIC to expand from ~18% each in FY25 (FY24: 16-17%) to ~23%/26% in FY28 on healthy operating performance, improved plant efficiency and tightening of net working capital cycle (by 10-15 days). An estimated annual FCF of INR4b+ will be used to pare debt and achieve net cash status in FY27E (vs. net debt of INR5.9b/4.7b in FY24/FY25). We estimate healthy OCF/EBITDA (~60%+) and FCF/PAT (80%+) over the next three years.

Year wise company progress

All customer list

Strong and established business model TIME largely follows a B2B business model (~95% of total revenue). It works with a diversified base of over 900 institutional customers, mainly from the chemicals, FMCG, and pharmaceuticals industries globally. The company has established strong and long-standing relationships with many of these clients. It maintains low customer concentration, with no single client contributing more than 5% to its total revenue. It also benefits from a diversified and strong sourcing/supplier base, procuring most of its raw materials locally through multiple suppliers located near its manufacturing plants. Additionally, TIME effectively manages price volatility through its robust pass-through mechanism. Industrial packaging is a working capital-intensive business, typically operating at a gross margin of ~25%, which restricts manufacturers’ return profiles. Additionally, there is a substantial global reconditioning market where these products are cleaned and reused 3-4 times before ultimately being recycled.

A leader in industrial packaging in India and the third largest globally TIME categorizes its business into two verticals: 1) Polymer Products (64% of the revenue mix) and 2) Composite Products (36% of the revenue mix). However, from a product segment perspective, it categorizes its business into: a) Established Products (73% of the revenue mix) and b) Value-added Products (VAP; 27% of the revenue mix).

TIME TECHNOPLAST company details report Time technoplast is a leader in polymer-based industrial packaging in India and ranks among the top three players globally. It is the world’s largest manufacturer of large-size plastic drums, holding an impressive 50-60% market share in India as well as a high share across 10 global markets (excluding the US, which is dominated by three large players).  TIME was the first company to launch IBCs in India, and ranks as the third-largest IBC manufacturer worldwide. It is also the second-largest MOX film manufacturer and a major manufacturer of HDPE pipes in India. It caters mainly to companies in the specialty chemicals and non-cyclical sectors (FMCG, F&B, and paints).  Over time, TIME has secured a significant share of business from its long-term relationships with global Fortune 500 companies. These factors have enabled the company to steadily grow its volume to 8-12% in its Established Products (73% revenue mix) while maintaining an EBITDA margin of 12-14%, even amid a volatile environment.

578🚀Long term level hit

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Procter & Gamble Health 4800-5200 Expected level 6450 Support 4600