IPO Update : Time Technoplast

Diversified Business, Aggressive Expansion Plans

Time Technoplast has entered the capital markets with an IPO of 39.21 lac shares at a price band of Rs. 290 -315 per share. Investment Guru is of the view that the company offers a business with adequate diversification and is a good play on the packaging sector. However the pricing of the IPO has also been aggressive as compared to the listed peers and hence investors should not expect hefty listing gains on this IPO. The overall rating for this IPO is AVERAGE.

Let’s take a look at the company

Time Technoplast Ltd. (TTL) (formerly Time Packaging Ltd.) offers a range of technology based polymer products catering to the growing sectors of the Indian economy with Industrial and Consumer Packaging Solutions, Lifestyle Products, Auto Components, Healthcare Products and Construction / Infrastructure related products. Company’s manufacturing facilities are spread over 6 strategic locations and equipped with 11 regional / area marketing offices. Its services over 500 institutional clients and the distribution network spread to reach 345 cities and towns.

TTL’s product portfolio consists of packaging products including Drums / Containers, Pails, PET sheets, Entrance Matting, Turfs, Garden Furniture, Automotive Components, Auto Disabling Medical Disposables and Warning Nets. While remaining focused on polymer products, TTL has built up a consolidated technology platform enabling development of wide range of innovative products.

The main Objects of the Issue are as follows

To finance setting up of a new project at Himachal Pradesh for manufacture of disposable medical devices

To set up integrated injection moulding facility at Silvassa for augmenting production capacity for plastic pails and auto components and consolidation of injection moulding operations for optimum utilization of capacity

To part finance setting up of a new project in our wholly owned subsidiary “Elan Incorporated, FZE”, in
Sharjah, UAE for packaging (plastic drums & containers and coni pails) and life style products (Garden
Furniture).

To set up production facility in our wholly owned subsidiary “ Novo Tech SP Z o.o.” Poland , Europe for auto
components (anti spray devices) and life style products (entrance matting and turf).

To repay Loan availed from IL&FS.

To acquire entire 49% holding of Time Securities Services Pvt. Ltd. in the Singapore based Joint Venture Mauser Holding Asia Pte. Ltd. with Mauser Holding Netherlands B.V. holding remaining 51%

Hence we see that around 60% of the IPO proceeds would go in to finance the expansion plans of the company while 25% would go in repaying the loan. Balance would be used to acquiring stake and other expenses.

The company boasts of brands like Time Mauser for packaging products, Ecopet for PET sheets, Meadowz for Turf, DuroTurf & Durosoft for mattings, Regal for garden furniture, 3S for Anti Spray Devices (Automotive component) and Genex for healthcare products.

The topline of the company has improved significantly from 2005 to 2006. The Total revenues for FY06 stood at 263 Crores against 146 crores in FY 05 , an increase of 80%. However for nine months ended 31st December , the Topline stood at 255 crore and if we take the extrapolate the nine months topline for Full year, it would show an increase of around 35%.

Net profit also witnessed a quantum jump from Rs. 8 crores in FY05 to Rs. 25 Crores in FY06. For nine months ended the company posted a net profit of 27 crores.

Weighted average EPS for last three years comes to 10.8 while the FY06 EPS comes to 15.6. On the weighted average EPS the Issue is priced at P/E range of 27-29. While on the FY06 EPS, the PE comes to the range of 19-20.

The company can track its peers in both plastic products as well as packaging industry . The industry composite P/E for plastic products is 20 while that of packaging sector is 30

Competitors like Supreme Industries is quoting at a P/E of 17 while Essel propack at a PE of 27. Sintex Industries is quoting at a P/E of 23. Based on the competitors P/E multiples, it looks like that the company has chosen a mid way in pricing its issue. However the competitors have no doubt a better brand visibility than that of Time Technoplast. The issue is prices fairly aggressive on this front.

Issue Opens : 18-May-2007

Issue Closes : 23-May-2007

Registrar : Intime Spectrum

10 comments:

Nitin said...

Rajesh sir,

Congratulations...Your Investment Idea of Reliance Industry given exactly 1 year back is very much near to its target ....you gave a 15 months target of 1800 and it has closed 1766 today.... Sir I was fortunate to read you idea and bought 50 shares @ 990. Thanks again for the wonderful and accurate advice. Please advice if I should hold or book profits ? I am also invested in your Investment Idea of M&M @ 740 and I hopeful that the stock will bounce back as you suggested.

Nitin

OptionPundit said...

Dear Rajesh, Nice blog covering indian market. Will visit often.

Profitable trading,
OptionPundit

saurabh said...

Hello Rajesh,

It has been quite some time now that you recommended Skumar nationwide,as predicted by you the company is up for hiving off its retail business,they have already declared it to the BSE.

Also this stock has been added into FnO segment,these news should have propelled the stock prices,but actually this stock seems to be going nowhere,please can we have a review for this particular stock.

Best Regards,
Saurabh.

Anonymous said...

Hi Rajesh

You have written sometime back that you will write a post on Ibvesting in gold. when can we expect the same ?

Sujit said...

Hi Rajesh
Taking forward the awareness exercises , we need to raise a serious issue.
The IT return form ITR1 for salaried people, that has been issued by our honorable(sic!) finance ministry contains no reference to Section 24 under which we salaried people were claiming deductions on the interest paid for the capital borrowed for the purpose of constructing, acquiring, or retrofitting a home.
Its going to pinch everyone. Lets raise our voices against this. Either the ministry clarifies this and gives us a new form, for faces peoples wrath for taking their money without notice.

Sorry for this diversion.

Regards
Sujit

Rajesh Soni said...

Thanks Nitin, Be assured of more bounties as a reader of this blog :)

Yes, M&M would make a comeback. Those who are considering it a pure auto sector play would soon realise there is more to M&M than just beong a leading automobile company. It's stake in other mahindra's ventures makes it an attractive buy and a well diversified stock. I would keep keep my faith intact in the stock.

Rajesh Soni said...

Hi Saurabh
Your request isnoted, I would soon publish a review on the stock. However as a investor, we should understand that the stock may not always react instantly to a certain development in a stock and we may need to be patient if we believe that sooner or later markets would realise the potential. I recommended this stock around 12-14 months back at Rs. 24 basing the turnaround story in the stock. I have recently mentioned this stock again as a good buy when it was hovering around 65 Rs. A disclaimer here that I am invested in this stock since last 15 months. Looks like markets are waiting the action to happen on the news rather than move just on the announcement. So keep yourfingers crossed!

Rajesh Soni said...

I am not sure when I would publish the article on Investing in Gold. But I am keeping this on my to do list. Please bear with me .

Rajesh Soni said...

Hi Sujit,
Please give me few days to go trough it and then I would post my views on the blog on this. Thanks for bringing this to my attention. Since most of the people would be getting their Form 16 by now , I would put a post on the ITR to be submiited and things to be considered for proper filing of return of Income and would capture this issue in that post.

saurabh said...

Hi rajesh,

Thanks for the reply,we believe in you.

Regards.
Saurabh