Time Technoplast Q3FY24 Earnings Conference Call – 13th Feb 2024

Financial Performance

• Time Technoplast reported a 20% YoY volume growth and 17% revenue growth in Q3 FY’24.

• The value-added products segment grew by 25% YoY, while the established product grew by 15%.

• EBITDA and PAT margins grew by 26% and 50% YoY respectively.

• The company achieved a turnover of 3,601 crores in the first nine months of FY’24, a 16% increase compared to the previous year.

• Profit after tax for the nine months stood at 218 crores, surpassing the entire previous year’s profit of 219 crores.

• Return on capital employed (ROC) increased by 2% to 15.6% in the nine months compared to 13.5% in the previous year.

Strategic Developments

• The company revised its CAPEX target for the full year to 175 crores from the original target of 200 crores.

• The board has approved the disinvestment of the 50% business in the Middle East for an evaluation of around USD25 million.

• The company has identified non-core assets worth Rs.125 crores and plans to complete the first transaction of Rs.26.5 crores for the sale of land and building within 90 days.

• The company is developing products towards green energy, including composite hydrogen cylinders and other composite products for use in the automotive industry.

• The company is participating in new tenders for LPG orders and expects to secure business for the next year.

• CNG composite capacity is being expanded from 480 to 1,080, with revenue expected to increase from Rs. 350 crores to Rs. 850 crores next year.

• The company has started the process of registering with the army and navy authorities for oxygen cylinder supply.

Financial Targets

• The company expects to achieve a revenue target of Rs.4,125 crores in FY’25, excluding the Middle East business, with a 15% growth rate.

• The company aims to achieve 50% growth across revenue, EBITDA, and PAT in the coming year, with some basis point improvement in the net margin.

• The company aims to improve its return on capital (ROC) from 16% to 20% in the next three years.

• The company plans to reduce CAPEX from 200 crores to 60-70 crores for maintenance purposes.

• The company expects a 15% CAGR in topline growth, with 30% CAGR in composite products and 10%-12% growth in established products.

• The share of value-added products is expected to increase from 27% to 36% in the next 2-3 years.

• The company is targeting an EBITDA margin of 14%-16% in the next three years.

Debt Reduction and Disinvestment

• The company plans to use the proceeds from the disinvestment and the realization of non-core assets to reduce its debt by March 2025, targeting a reduction from Rs. 800 crores to around Rs. 450 crores.

• Time Technoplast does not have any immediate plans to sell the remaining 50% stake in the divested business and intends to continue running it for at least three years.

Market Expansion and Diversification

• The company aims to grow its revenue faster, targeting an 18%-20% growth rate, particularly in Saudi Arabia.

• Time Technoplast has received approval for its oxygen cylinder for CNG in the automotive industry but is yet to capture a significant market share due to capacity limitations.

• The company is exploring the possibility of expanding into the Southeast Asian market.