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 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 Read More!
