Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TIME TECHNOPLAST LTD (TTL)
PRICE: RS.57 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.62 CONS. FY13E P/E: 11.1X
q TTL has reported lower than expected numbers for Q2 FY12. The miss is
on the revenues and margins front. Decline in margins has been due to
forex charges on import of feedstock. Interest costs have also shot up
significantly as the company has been on a capex mode. As a result, PAT
is down 35% yoy for the quarter.
q At CMP, TTL is trading at P/E of 11.1xFY13e, which we believe is reasonable.
We arrive at a revised DCF based target price of Rs 62 (Earlier Rs 72).
In view of the moderate upside, we maintain ACCUMULATE on the stock.
q Key Risks: Delay in capacity expansion & commercialization of new products.
Currency fluctuation & pricing of key raw material i.e. HDPE
n For Q2FY12, the company reported revenues of Rs.3.5 bn, up modestly at 10%
YoY. Standalone revenues grew 21% yoy to Rs 2.1 bn, accounting for 55% (vs
49% in Q2 FY11) of the consolidated revenues.
n Thus, it appears that revenues from the international geographies have slowed
down considerably in the quarter. However, we expect the share of overseas
revenues to increase as new manufacturing facilities are coming onstream across
Asia and Middle East.
n The operating margin during Q2FY12 was down 330 bps YoY to 15.9%. The
company uses both high density (90%) and low-density (10%) polyethylene as its
key raw material and imports 65% of its requirements. Although polyethylene is
a derivative of crude its co-relation with the crude prices is only ~20%. During
the quarter, average HDPE prices were up 14% yoy but down sequentially.
n During the quarter, the company took a hit of Rs 71 mn on account of adverse
impact of foreign exchange on import of raw materials.
n Further, it needs to be noted that Q2 FY12 include operations of some of the
Overseas greenfield Projects, which have started production only in the recent
months. Hence, the fixed expenditures pertaining to these units have also pressured
the margins.
n Interest costs have risen 49% yoy due to a combination of higher leverage and
increase in cost of borrowings. The company has a debt-equity ratio of 0.82x as
of Q2FY12. Gross borrowings on consolidated basis stood at Rs 6.4 bn.
n Tax rate during the quarter stood at 27% which was higher than our expectations.
The company has guided for a blended tax rate of 23% in FY12.
Business Update
The key product categories for the company are Industrial packaging products,
lifestyle products (door mats, chairs, syringes), technical products (automotive components),
infrastructure products (pipes and monolithic construction) and new products
(composite cylinders). The largest segment is the industrial packaging accounting
for 59% of revenues.
We expect the contribution of overseas business to increase from 11% in FY11 to
15% in FY13E. TTL has been expanding facilities across India (14 locations) to service
customer in an efficient and timely manner. In order to replicate its success in
India to high growth Asian and Middle East countries, it has acquired and set up
facilities in Bahrain, Taiwan, China, Thailand, Poland, Romania, and Czech Republic
(0.5 mn composite LPG cylinders)
Expansion projects update
The implementation of various Overseas Projects is progressing as per the schedule .
n Indonesia
The production of the Intermediate bulk containers has since commenced & the
production of 200 liters Drums is scheduled to start by end of the current quarter.
n Taiwan
The company has completed the Project of manufacturing Intermediate bulk
containers.
n Bahrain
The company has completed the greenfield Project for manufacturing of Industrial
Packaging Products comprising of 200 Liters drums & Intermediate Bulk Containers.
The other greenfield Projects at Egypt, South Korea, South China, Vietnam are
progressing satisfactorily & expected to go on stream over the coming 4-6
months.
Financials:
The upcoming manufacturing units should aid growth momentum. However, on the
profitability front, the company's margins may see a decline due to rise in share of
overseas revenue.
The company had undertaken a capex of Rs 1.8-2.0 bn in FY11 and has guided for
capex of Rs 1.8 bn in FY12 towards new factories and expansion plans. This has
crippled cash flow generation.
Earnings estimate
(Rs mn) Earlier Revised
Revenue (Rs mn) 16179 14767
EBITDA (%) 17.5 17.2
EPS (Rs) 5.5 4.6
% change -16
Source: Kotak Securities - Private Client Research
Valuations and recommendation
At CMP, TTL is trading at P/E of 12.3x and 11.1x FY12 and FY13 earnings respectively.
We have revised our earnings estimate for FY12 and arrive at a DCF based
target price of Rs 62 (Rs 72 earlier). In view of the moderate upside, we maintain
ACCUMULATE on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TIME TECHNOPLAST LTD (TTL)
PRICE: RS.57 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.62 CONS. FY13E P/E: 11.1X
q TTL has reported lower than expected numbers for Q2 FY12. The miss is
on the revenues and margins front. Decline in margins has been due to
forex charges on import of feedstock. Interest costs have also shot up
significantly as the company has been on a capex mode. As a result, PAT
is down 35% yoy for the quarter.
q At CMP, TTL is trading at P/E of 11.1xFY13e, which we believe is reasonable.
We arrive at a revised DCF based target price of Rs 62 (Earlier Rs 72).
In view of the moderate upside, we maintain ACCUMULATE on the stock.
q Key Risks: Delay in capacity expansion & commercialization of new products.
Currency fluctuation & pricing of key raw material i.e. HDPE
n For Q2FY12, the company reported revenues of Rs.3.5 bn, up modestly at 10%
YoY. Standalone revenues grew 21% yoy to Rs 2.1 bn, accounting for 55% (vs
49% in Q2 FY11) of the consolidated revenues.
n Thus, it appears that revenues from the international geographies have slowed
down considerably in the quarter. However, we expect the share of overseas
revenues to increase as new manufacturing facilities are coming onstream across
Asia and Middle East.
n The operating margin during Q2FY12 was down 330 bps YoY to 15.9%. The
company uses both high density (90%) and low-density (10%) polyethylene as its
key raw material and imports 65% of its requirements. Although polyethylene is
a derivative of crude its co-relation with the crude prices is only ~20%. During
the quarter, average HDPE prices were up 14% yoy but down sequentially.
n During the quarter, the company took a hit of Rs 71 mn on account of adverse
impact of foreign exchange on import of raw materials.
n Further, it needs to be noted that Q2 FY12 include operations of some of the
Overseas greenfield Projects, which have started production only in the recent
months. Hence, the fixed expenditures pertaining to these units have also pressured
the margins.
n Interest costs have risen 49% yoy due to a combination of higher leverage and
increase in cost of borrowings. The company has a debt-equity ratio of 0.82x as
of Q2FY12. Gross borrowings on consolidated basis stood at Rs 6.4 bn.
n Tax rate during the quarter stood at 27% which was higher than our expectations.
The company has guided for a blended tax rate of 23% in FY12.
Business Update
The key product categories for the company are Industrial packaging products,
lifestyle products (door mats, chairs, syringes), technical products (automotive components),
infrastructure products (pipes and monolithic construction) and new products
(composite cylinders). The largest segment is the industrial packaging accounting
for 59% of revenues.
We expect the contribution of overseas business to increase from 11% in FY11 to
15% in FY13E. TTL has been expanding facilities across India (14 locations) to service
customer in an efficient and timely manner. In order to replicate its success in
India to high growth Asian and Middle East countries, it has acquired and set up
facilities in Bahrain, Taiwan, China, Thailand, Poland, Romania, and Czech Republic
(0.5 mn composite LPG cylinders)
Expansion projects update
The implementation of various Overseas Projects is progressing as per the schedule .
n Indonesia
The production of the Intermediate bulk containers has since commenced & the
production of 200 liters Drums is scheduled to start by end of the current quarter.
n Taiwan
The company has completed the Project of manufacturing Intermediate bulk
containers.
n Bahrain
The company has completed the greenfield Project for manufacturing of Industrial
Packaging Products comprising of 200 Liters drums & Intermediate Bulk Containers.
The other greenfield Projects at Egypt, South Korea, South China, Vietnam are
progressing satisfactorily & expected to go on stream over the coming 4-6
months.
Financials:
The upcoming manufacturing units should aid growth momentum. However, on the
profitability front, the company's margins may see a decline due to rise in share of
overseas revenue.
The company had undertaken a capex of Rs 1.8-2.0 bn in FY11 and has guided for
capex of Rs 1.8 bn in FY12 towards new factories and expansion plans. This has
crippled cash flow generation.
Earnings estimate
(Rs mn) Earlier Revised
Revenue (Rs mn) 16179 14767
EBITDA (%) 17.5 17.2
EPS (Rs) 5.5 4.6
% change -16
Source: Kotak Securities - Private Client Research
Valuations and recommendation
At CMP, TTL is trading at P/E of 12.3x and 11.1x FY12 and FY13 earnings respectively.
We have revised our earnings estimate for FY12 and arrive at a DCF based
target price of Rs 62 (Rs 72 earlier). In view of the moderate upside, we maintain
ACCUMULATE on the stock.
No comments:
Post a Comment