Time Technoplast Q3FY24 Earnings Conference Call - 13th Feb 2024
Financial Performance
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Time Technoplast reported a 20% YoY volume growth and 17% revenue growth in Q3 FY’24.
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The value-added products segment grew by 25% YoY, while the established product grew by 15%.
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EBITDA and PAT margins grew by 26% and 50% YoY respectively.
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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.
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Profit after tax for the nine months stood at 218 crores, surpassing the entire previous year’s profit of 219 crores.
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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
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The company revised its CAPEX target for the full year to 175 crores from the original target of 200 crores.
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The board has approved the disinvestment of the 50% business in the Middle East for an evaluation of around USD25 million.
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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.
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The company is developing products towards green energy, including composite hydrogen cylinders and other composite products for use in the automotive industry.
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The company is participating in new tenders for LPG orders and expects to secure business for the next year.
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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.
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The company has started the process of registering with the army and navy authorities for oxygen cylinder supply.
Financial Targets
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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.
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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.
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The company aims to improve its return on capital (ROC) from 16% to 20% in the next three years.
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The company plans to reduce CAPEX from 200 crores to 60-70 crores for maintenance purposes.
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The company expects a 15% CAGR in topline growth, with 30% CAGR in composite products and 10%-12% growth in established products.
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The share of value-added products is expected to increase from 27% to 36% in the next 2-3 years.
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The company is targeting an EBITDA margin of 14%-16% in the next three years.
Debt Reduction and Disinvestment
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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.
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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
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The company aims to grow its revenue faster, targeting an 18%-20% growth rate, particularly in Saudi Arabia.
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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.
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The company is exploring the possibility of expanding into the Southeast Asian market.
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