Time Technoplast gains 6% as ICICI Sec initiates coverage; sees 22% upside
gained over 6 percent intraday on Tuesday after ICICI Direct initiated coverage on the stock with a buy rating and a target of Rs 230, implying an upside of 22 percent.
The brokerage highlighted how its expansion in value-added products and new launches could boost the stock.
“Historically, rising contribution of the VAPs category to the topline (from 11% in FY15 to 13% in FY17) was also one of the reasons for an increase in consolidated EBITDA margin by 100 bps in FY15-17,” the brokerage said in its report.
Further, better utilization and stable raw material prices to help drive profitability, it said.
“Stable raw material prices and rising contribution of VAPs in the topline would benefit the company in terms of rising EBITDA margin, going forward. Also, lower interest outgo would help drive PAT CAGR of 25% in FY17-20E,” the report stated.
The brokerage also sees a possible re-rating backed by strong growth prospects.
The company could record strong earning CAGR of 25% in FY17-20E supported by improvement in margin and lower interest outgo. A further improvement in asset turnover would result in lower debt/equity, going forward.
“We expect a major government infrastructure push and replacement demand to be key catalysts and lead to a further re-rating of the stock. We value the company on an EV/EBITDA basis by ascribing EV/EBITDA multiple of 9x FY20E EBITDA,” the brokerage said, in a report.
At 11:42 hrs Time Technoplast was quoting at Rs 193.85, up Rs 6.45, or 3.44 percent, on the BSE. It touched an intraday high of Rs 199.10 and an intraday low of Rs 192.70.