Can a stock priced below Rs 300 offer more than 50% upside? Domestic brokerage house Motilal Oswal believes there could be significant room for gains in Time Technoplast.
The brokerage has retained its ‘Buy’ rating on the plastic products company and set a target price of Rs 280 per share. This implies an upside potential of around 54% from the current market price.
According to the brokerage report, the company has managed to navigate a difficult operating environment while continuing to grow its business.
What is driving the brokerage’s view? There are three key factors to watch –
How Time Technoplast handled a difficult year
FY26 was marked by several challenges. Geopolitical tension, the prolonged Russia-Ukraine conflict and volatility in crude oil, polymer prices, freight costs and currencies created pressure for businesses.
Time Technoplast, however, continued to report growth during the period.
According to the brokerage report, revenue, EBITDA, and PAT increased by around 12%, 14% and 21% year-on-year, respectively, reaching new highs.
One factor behind this performance was the company’s predominantly Business-to-Business (B2B) model. Its monthly pricing mechanism allows it to pass changes in input costs to customers with a lag of around 20-25 days.
“FY26 turned out to be the most successful year in company’s history,” added Motilal Oswal report.
The momentum has also continued into the first quarter of FY27, according to Motilal Oswal.
Time Technoplast: Can volumes grow faster now on
The next is growth. According to the brokerage report, Time Technoplast remains on track for its medium-term volume growth guidance of 13-15%.
Motilal Oswal sees several potential growth drivers. The board is set to consider the merger of the company’s around 75% owned subsidiary, TPL Plastech, with Time Technoplast.
As per Motilal Oswal report, the merger could improve operational efficiency. TPL Plastech reported FY26 revenue of 420 crore and PAT of Rs 290 crore.
The company has also completed a greenfield plant at Bhilad in Gujarat. The fully automated facility uses robotics and will manufacture products such as conical polymer pails and injection-moulded products.
The plant has a potential revenue capacity of Rs 100 crore.
“Business well on track for 13-15% volume growth, as guided,” added the brokerage report.
The company is also exploring opportunities in hydrogen cylinders and has received a small order from NTPC for a locomotive pilot project.
Rising input prices: A problem or an opportunity?
Higher raw material prices may appear negative at first. But according to Motilal Oswal, Time Technoplast’s pricing mechanism could help it pass on the increase to customers.
The brokerage expects revenue growth of more than 20% in FY27, after revenue increased 25% year-on-year in the first quarter. Time Technoplast operates on an absolute EBITDA-per-tonne basis. As a result, margins can appear lower when input prices rise, even when the underlying EBITDA continues to grow.
The company is also focusing on automation and consolidation to improve efficiency. Interest costs could fall after debt repayment using proceeds from the Qualified Institutional Placement (QIP).
Motilal Oswal expects revenue, EBITDA and PAT to grow at Compound Annual Growth Rates (CAGR) of 17%, 16% and 21%, respectively, between FY26-28. The brokerage estimates that Return on Equity (RoE) and pre-tax Return on Capital Employed (RoCE) could rise to around 14% and 19% by FY28.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.