TIME TECHNOPLAST

Riding polymer product expertise

Time Technoplast, the flagship of the Time group, an Indian multinational conglomerate, is engaged in the manufacture of technology-based polymer and composite products. The company’s product portfolio consists of technologically driven innovative products catering to growing industry segments like industrial packaging solutions, lifestyle products, automotive components, healthcare products, infrastructure, construction-related products, material handling solutions and composite cylinders.

The Time Tech group operates more than 34 production facilities across the globe and is recognized for its innovative plastic products. It operates in India, Egypt, Bahrain, Indonesia, Malaysia, the UAE, Taiwan, Thailand, Vietnam, Saudi Arabia and the US.

Today, globally, the Time group is the largest manufacturer of large-size plastic drums, the second largest manufacturer of composite cylinders and the third largest manufacturer of intermediate bulk containers. Since its inception in 1992, the Time Tech group has set itself apart from competitors by focusing on research and development, futuristic product designing, and superior customer service by setting up 28 manufacturing units and 8 regional and marketing offices. All these have enabled the group to develop new innovative products as a replacement for metal products by using polymers and employing plastic processing technologies like blow, injection and extrusion.

The company has made steady progress on the financial front. During the last 12 years, its sales turnover (composite growth) has expanded from Rs 1,510 crore in fiscal 2012 to Rs 4,289 crore in fiscal 2023, with operating profit more than doubling from Rs 243 crore to Rs 577 crore and the profit at net level also more than doubling from Rs 92 crore to Rs 224 crore. What is more, in view of the company’s growth plans, the prospects for it going ahead are very bright. Consider:

• The company is changing its product mix to earn more profit. The improved product mix is expected to drive the EBITDA margin from the current level of 12.5 per cent to 15.5 per cent by fiscal 2025. The company has laid out plans to achieve Rs 5,000 crore revenue (per annum) from its newly launched CNG cascade business. This improved product mix is expected to drive the EBITDA margin to 15.5 per cent by fiscal 2025. In fact, the company has laid out plans to achieve Rs 5,000 crore revenue by fiscal 2025, led by the value-added product segment.
• The future improved trend is well- reflected in the actual performance during the first half of the current fiscal. During the period from April to September 2023, sales grew 15 per cent to Rs 2,271.53 crore, and OPM improved 70 bps to 13.7 per cent which took operating profit up 27 per cent to Rs 1.24 crore. Net profit shot up 34 per cent to Rs 158.52 crore. Now, the management is confident of achieving the revenue target of Rs 5,000 crore by fiscal 2025.

OVERSEAS BIZ

• The company has planned to restructure its overseas business to capture reconstruction in Asian countries and the Middle East, and aims at growth through joint ventures/investments of subsidiaries/ material subsidiaries/step down subsidiaries. It is currently in the final stage of discussions with prospective investors, and is confident of closing the transaction. The sale proceeds will be used for the repayment of its debt, capex for composite cylinders, LPG, CNG and hydrogen. In order to benefit shareholders, the company has signed an MoU for selling its land and building located in northern India for a total consideration of Rs 26.5 crore. The proceeds will be used partly for reduction of debt and partly towards the expansion of existing established and value-added products.

• In a significant development, Time Securities Services Pvt. Ltd, the promoter company of Time Technoplast, has fully repaid the outstanding loan in the process, the pledged 62,93,120 shares of Time Technoplast were released. Now, the promoters’ 100 per cent shareholding is free from any pledge. This development will go a long way in re-rating the company in due course.
• The company is in expansion mode. During the first half of the current fiscal, capex was Rs 99 crore. This was for expansion of value-added products like CNG/BC (Rs 59 crore) and normal capex (Rs 44 crore). An almost similar amount will be spent in the second half.

O.M.C. DEMAND

• The next phase of expansion would come from its investments in manufacturing of LPG and CNG composite cylinders. According to management estimates, this expansion would lead to business potential of Rs 2,200 crore per year in the cylinders business. The strong demand for composite LPG cylinders from oil marketing companies and a healthy order book for the CNG car business will drive the value-added segment going forward. The company will continue to benefit from its dominant market position, diversified product range and client profile with better economies of scale and wide geographical reach. In FY 2024, we expect the company to register sales EPS of Rs 13.2, which is expected to rise to Rs 16.8 in FY 2025. The stock trades at Rs 184. P/E on the FY 2025 projected EPS works out to just 10.9.

PERFORMANCE INDICATORS (Rs. in crore)

GRAUER & WEIL INDIA

Trendsetter in metal finishing

Grauer & Weil India, popularly known as Growel and originally set up by British nationals Grawer and Weil, was later taken over by the More group. It is a trendsetter in the general metal finishing industry and a formidable player in the field of surface finishing and engineering of equipment. Subsequently it entered the paints industry with the acquisition of Bombay Paints. It also entered the real estate business and built a sprawling 4,75,000 square feet shopping mall in Kandivali, a western suburb of Mumbai.

The company is one of the few in the world that offers complete coating solutions to its customers under one roof. Its engineering division also manufactures and supplies automatic plating lines phosphating plants, painting plants and filtration systems to meet end-to-end surface finishing requirements of its customers.

In short, the company operates in three broad business segments – surface finishing (which accounts for 83 per cent of revenues), engineering (13 per cent of revenues) and shopping mall (4 per cent of revenues). The surface finishing segment comprises the chemicals division, paints division and oil division. Under the chemicals division, it manufactures chemicals required for metal finishing (electroplating chemicals), their intermediates and other speciality chemicals. In the paints division, it manufactures industrial paints, and under the oil division it manufactures various oils, including chain oil coolant oil, wire drawing oil, gear oil and hydraulic oil. The company’s facilities are located at Dadar, Vapi (Gujarat), Barotiwala (HP), Samba (J&K), Khed (Pune district in Maharashtra) and Kandivali-Mumbai (the mall).

LOW DEBT

Grauer & Weil has made steady progress on the financial front, with compounded sales growth during the last 10 years being 12 per cent and profit growth 15 per cent. What is more, prospects ahead are all the more promising. Consider:

• The company is on a steady growth path. During the last 12 years, its sales turnover has grown from Rs 326 crore in fiscal 2012 to Rs 981 crore in fiscal 2023, with operating profit inching up from Rs 59 crore to Rs 156 crore and the profit at net level spurting around five times – from Rs 23 crore to Rs 115 crore. The company’s fundamentals are strong. The ROE and ROCE stood at 17.91 % and 23.76% respectively, which suggests good returns for shareholders’ capital and efficiency in the utilization of company resources. The debt-to-equity ratio of 0.03 suggests that the company has low debt and primarily uses its own funds to run its operations. Talking about the shareholding pattern, it can be said that the promoters have consistently held a stake of 69.05 per cent for the past several quarters, indicating their confidence in the company’s future prospects.
• The electroplating chemicals division has a wide basket of products and these chemicals find applications in various industries such as automobiles, home fittings, consumer durables, gems and jewellery – all of which are doing quite well. Moreover, the company is also involved in the manufacture of industrial paints — the second largest contributor to the company’s revenues. Last year, it forayed into the decorative paints segment and intends to leverage its industrial clientele base to increase revenue from this segment.

PLATING DEMAND

• Plating on plastic is one of the largest markets growing within the plating industry, as manufacturers are cutting costs by utilizing plastic for a wide of parts – from washing machines to car logos. These parts are then plated with a crome or nickel finish for decoration to increase attractiveness of the two major consumer-facing markets — automotive and home appliances – that are driving the demand for plating on plastic. And Growel is a leading player in this area.
• In the area of paint coatings, there are big opportunities in India due to huge investments in oil and gas, infrastructure and drinking water segment. Growel al ready has a strong presence in these markets and will continue to pursue it strongly. For H1, net sales increased 11.64% to Rs 450.75 crore. Net profit increased 30.87% to Rs 74.36 crore. In FY 2024, we expect the company to register a sales EPS of Rs 6.9, which is expected to rise to Rs 9.1 in FY 2025. The stock trades at Rs 129. P/E on the FY 2025 EPS.

PERFORMANCE INDICATORS (Rs. in crore)