Kotak Sec has initiated coverage on Time Technoplast with a BUY rating. IT is a market leader in the industrial packaging segment with more than 75% market share. These are used as barrels or containers for packing by users in specialty chemicals, paints, inks, pharmaceutical intermediates, FMCG intermediates, construction chemicals, additives, lube oils and food industry among others.
The company has a technical collaboration with Mauser Germany for packaging products. TTL has key strengths in polymers, technology and innovation. Based on this, it has successfully diversified into high-end polymer based innovative applications for infrastructure, healthcare, auto components, and lifestyle products that typically enjoy higher margins. It has also diversified into telecom battery business and formed a JV with Schoeller Arca Systems for material handling solution and systems.
TTL has diversified into telecom battery business by acquiring Hyderabad based NED energy systems and Bahrain based Gulf Powerbeat WLL. Through the acquisitions, TTL plans to leverage NED’s technology in automotive batteries to achieve significant growth for its well established automotive segment where it enjoys strong relationships with major OEMs as Tier-I supplier.
The recently commissioned new plants in India, Poland and Sharjah, expansions, acquisitions and a strong product pipeline would lead to 21.9% growth in revenues and 33.8% growth in profitability for the company in FY10E.
Kotak is positive on the long term growth prospects of TTL and is initiating coverage with a BUY recommendation on TTL with a price target of Rs.60 (50% upside potential) over a 12-month horizon.