The brokerage has a “buy” rating on the stock with a price target of ₹578 per share. It ended the previous session at ₹411 apiece.
Motilal Oswal said with right metrics at the right metric a re-rating is in sight for the stock.
The brokerage listed five reasons for initiating coverage on Time Technoplast:
1. Strong market position and product leadership
Motilal Oswal said Time Technoplast is a global leader in large-size plastic drums with 50%-60% market share in India and also has major international presence. It is among the top-three players globally in intermediate bulk containers (IBCs) and Type IV composite LPG/CNG cylinders.
2. High growth segments and robust financial outlook
The company’s value added products such as the composite LPG/CNG cylinders, are expected to drive a 20% revenue compound annual growth rate (CAGR) and 18% earnings before interest, taxes, depreciation and amortisation (EBITDA) margin, contributing to an estimated profit after tax CAGR of 23% for FY25-28, Motilal Oswal aid.
3. Improving returns and financial health
The brokerage said that despite the company’s ongoing capex of ₹170 crore annually, pre-tax return on capital employed (RoCE) and return on invested capital (RoIC) are projected to rise 23% and 26% by the financial year 2028, respectively. The same will be supported by cost controls, asset monetisation and better working capital management, Motilal Oswal said.
4. Deleveraging path
Time Technoplast is expected to turn net cash by financial year 2027, aided by more than ₹400 crore in annual free cash flow and efficient capital allocation, Motilal Oswal said.
5. Attractive valuation:
Motilal Oswal said that considering Time Technoplast’s strong growth prospects, improving return ratios and attractive valuation of 16 times its estimated FY27 price-to-earnings ratio, it has initiated coverage on the stock, with a “buy” rating and a price target with a 41% upside, valuing the stock at 22 times FY27 price-to-earnings ratio.
Other than Motilal Oswal, Systematix Group is the only other brokerage that has coverage on the stock with a “buy” rating as well and a price target of ₹615 per share.
Shares of Time Technoplast ended the previous trade session 4.7% higher at ₹411 apiece. It gained 6.5% to hit an intraday high of ₹437 apiece on Monday, June 9. The stock has gained nearly 41.2% in the past month.
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