Motilal Oswal: Time Technoplast Set for 69% Gain on 3 Growth Catalysts

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AuthorIshaan Verma|Published at:
Motilal Oswal: Time Technoplast Set for 69% Gain on 3 Growth Catalysts
Overview

Motilal Oswal initiated coverage of Time Technoplast with a 'Buy' rating and a ₹280 price target, expecting a 69% upside. The firm cited stable global operations, margin growth from pricing power in polymers, and expansion in value-added products as key drivers. A recent stock price dip has made valuations more attractive, supported by strong earnings visibility for the next three years.

Motilal Oswal highlighted Time Technoplast's stable business model, which is largely shielded from global supply chain disruptions. The company diversifies geographically through localized sourcing, manufacturing, and sales across India and 10 overseas markets, generating 65% of its revenue. This decentralized approach, along with exploring alternative raw material sources, ensures operations continue smoothly even during geopolitical tensions.

Margin Growth from Pricing Power

A significant 30-40% increase in polymer prices is a tailwind for Time Technoplast. The company has successfully passed these higher costs directly to customers, protecting and potentially growing its profit margins. With typical inventory held for about three months, the firm can benefit from price increases after purchasing. While higher prices might slightly slow down short-term volumes, profitability is expected to benefit, supporting value growth.

Expansion Boosts Value-Added Products

Time Technoplast is investing in significant capital expenditures. This includes a new greenfield plant designed for 600 composite cylinders and an integrated recycling unit. A brownfield expansion of its intermediate bulk container facility is set to finish by the fourth quarter of fiscal year 2026. These investments aim to strengthen the company's position in higher-margin, value-added product areas. Revenue from these segments is projected to grow 20% annually from FY25 to FY28, with an EBITDA margin of 18.8%, driving overall earnings.

Strong Financial Outlook and Attractive Valuation

Motilal Oswal forecasts robust financial growth through FY28, with revenue expected to reach ₹8,000 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to reach ₹1,210 crore, and net profit to ₹700 crore. Return on Equity (ROE) is expected to approach 16.2% and Return on Capital Employed (ROCE) 22.8%. Following a recent 15% stock price correction, shares now trade at a more attractive 12-14 times forward earnings. This valuation led Motilal Oswal to set a ₹280 target price, based on a 20 times FY28 earnings multiple.

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