November 27, 2017 Time Technoplast...

November 27, 2017

Initiating Coverage

ICICI Securities Ltd | Retail Equity Research

Strong play in polymer product category...

Time Technoplast (TTL) is the largest manufacturer of polymer based

industrial packaging products (with volume market share of ~70%) and

composite cylinders in India. During FY15-17, TTL divested its stake in less

profitable geographies and did a capex of over ~| 300 crore for expansion

of various product lines. Being largely in the B2B category, TTL plans to add

more value added products (VAPs) to reduce its dependence on

established products (EPs). We believe VAPs contribution to the topline

would increase sharply from 13% in FY17 to 23% by FY20E, led by revenue

CAGR of ~40% in FY17-20E. Additionally, with sales growth in the EPs

segment (~11%), we believe consolidated sales would record a CAGR of

~16% in FY17-19E. Strong volume growth (due to new product launch),

higher utilisation of overseas business and stable raw material prices are

expected to result in elevated EBITDA margin by FY20E. Further, no major

capex on the cards and saving in interest cost (due to reducing debt/equity)

would result in better return ratios, going forward (RoCE, RoE of ~18%,

~15% by FY20E). We initiate coverage on TTL with a BUY rating.

Aggressive capacity addition to drive VAPs revenue contribution

The VAPs category commands ~300 bps higher EBITDA margin compared

to EPs category. Historically, rising contribution of the VAPs category to the

topline (from 11% in FY15 to 13% in FY17) was also one of the reasons for

an increase in consolidated EBITDA margin by 100 bps in FY15-17. We

believe an expansion in existing VAPs category and new launches would

help drive TTL’s consolidated revenues and earnings, going forward.

Better utilisation, stable raw material prices to help drive profitability

Lower penetration of polymer drums in the APAC region coupled with TTL’s

plan to increase the utilisation of overseas plants (from average ~67% to in

line with utilisation of Indian operation of ~80%) would benefit the

company in the long run. Further, stable raw material prices and rising

contribution of VAPs in the topline would benefit the company in terms of

rising EBITDA margin, going forward. Also, lower interest outgo would help

drive PAT CAGR of ~25% in FY17-20E. Going forward, that would help

bring back the return ratios to elevated level.

Possible re-rating backed by strong growth prospects

We believe TTL will record strong earning CAGR of ~25% in FY17-20E

supported by improvement in margin and lower interest outgo. A further

improvement in asset turnover would result in lower debt/equity, going

forward. We expect a major government infrastructure push and

replacement demand to be key catalysts and lead to a further re-rating of

the stock. We value the company on an EV/EBITDA basis by ascribing

EV/EBITDA multiple of 9x FY20E EBITDA. We initiate coverage on the stock

with a BUY rating and a target price of | 230/share.

Exhibit 1: Financial summery

(| Crore) FY16 FY17 FY18E FY19E FY20E

Net Sales 2,422.7 2,754.6 3,092.8 3,689.0 4,311.5

EBITDA 347.8 404.2 464.9 552.6 646.4

Net Profit 138.1 147.1 182.3 236.7 287.6

P/E (x) 30.8 28.9 23.3 18.0 14.8

Price / Book (x) 3.6 3.2 2.9 2.5 2.2

EPS (|) 6.1 6.5 8.1 10.5 12.7

EV/EBITDA (x) 13.8 11.9 10.4 8.6 7.2

RoCE (%) 13.3 14.2 15.4 17.0 18.0

RoE (%) 10.5 11.1 12.5 14.1 14.8

Source: Company, ICICIdirect.com Research

Time Technoplast (TIMTEC)

| 188

Rating Matrix

Rating : Buy

Target : | 230

Target Period : 12 months

Potential Upside : 22%

YoY Growth (%)

FY17 FY18E FY19E FY20E

Net Sales 13.7 12.3 19.3 16.9

EBITDA 16.2 15.0 18.9 17.0

EBIT 15.9 15.0 20.8 15.9

Net Profit 6.5 23.9 29.8 21.5

Current & target multiple

FY17 FY18E FY19E FY20E

P/E 28.9 23.3 18.0 14.8

Target P/E 35.3 28.5 22.0 18.1

EV / EBITDA 11.9 10.4 8.6 7.2

P/BV 3.2 2.9 2.5 2.2

RoNW 11.1 12.5 14.1 14.8

RoCE 14.2 15.4 17.0 18.0

Stock Data

Particulars

Bloomberg/Reuters code TIME:IN/TIME.BO

Nifty 10365

Average Volume (Year) 261280

Market Capitalization | 4252 Crore

Total Debt (FY17) | 631 Crore

Cash and Investments (FY17) | 56 Crore

EV | 3677 Crore

52 week H/L (|) 212/85

Equity capital | 12.0 Crore

Face value | 1

MF Holding (%) 9.1

FII Holding (%) 19.4

Comparative return matrix (%)

Returns (%) 1M 3M 6M 12M

Essel Propack 13.7 17.6 17.5 33.4

Mold Tek Tec -3.3 8.0 11.7 70.7

Time Techno -1.1 7.4 44.2 110.9

Price movement

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TIME Nifty 50

Research Analyst

Sanjay Manyal

[email protected]

Hitesh Taunk

[email protected]


Company background

Started in 1992, Time Technoplast (TTL) is engaged in manufacturing a

diversified range of polymer products in India & overseas mainly for

industries like speciality chemicals, petrochemicals, agriculture,

infrastructure & household items. TTL manufactures plastic products,

intermediate bulk containers (IBCs), pipes, composite cylinders & multilayer

multi axis oriented cross laminated (MOX) films. These products can mainly

be divided into 1) established products (EPs) and 2) value added products

(VAPs). EPs mainly include plastic products & pipes in their portfolio. These

two products together contribute ~87% to TTL’s topline and command

EBITDA margin of ~14%. The plastic product category can be further

segregated into different product lines of industrial packaging, energy

storage, automotive component, technical & lifestyle products. Industrial

packaging products (excluding IBCs) include drums, jerrycans, pails that

contribute ~62% to the consolidated topline. TTL is the largest

manufacturer of industrial packaging (polymers) in Asia, Middle East &

North Africa (MENA) region with a presence in nine countries (market

leader in eight).

The domestic industrial packaging segment is a largely organised business

(~90% organised) wherein TTL is a market leader with ~70% volume

market share followed by Balmer Lawrie (15% market share). On the other

hand, composite cylinder, IBCs, MOX films are in the VAPs category, which

contributes ~13% to consolidated revenue and command EBITDA margin

of ~17%, ~300 bps higher than EPs. In the composite cylinder category

TTL is the second largest players globally (after Hexagon Ragasco) and

largest in India with total production capacity of 1.4 million units per annum.

Further, TTL has recently added MOX films and double wall corrugated

(DWC) pipes under the VAP category. Besides, overseas operations (largely

Middle East, South Asian countries) contribute ~30% to the consolidated

topline. Under the restructuring process, TTL has divested its stake in South

Korean and Chinese operation during FY16. Currently, TTL operates with 28

manufacturing locations across the globe of which 18 are in India. In FY17,

the company did a capex of | ~200 crore to increase the capacity of HDPE

pipe (includes addition of DWC capacity) and IBCs by ~70% and 39% YoY,

respectively. It doubled the manufacturing capacity of composite cylinders.

TTL recorded sales CAGR of ~6% during FY15-17 (~11% adjusted with

discontinued operations) led by the strong performance of VAPs, which

recorded sales CAGR of ~25%. Rising contribution of VAPs helped the

company to increase its EBITDA margin by 200 bps in FY15-17 to 14.7%.

Further, a reduction in debt/equity from 0.8x in FY15 to 0.5x in FY17 helped

save interest outgo by 13%, leading to PAT CAGR of 16% in FY15-17.

Exhibit 2: Revenue break-up of Time Technoplast

IBCs

11%

Composite

Cylinder

3%

Pipe

9%

Plastic

77%


Exhibit 3: Geographical revenue break-up

Overseas

29%

Domestic

71%

Source: Company, ICICIdirect.com Research, FY16

Shareholding pattern (Q2FY18)

Shareholding Pattern Holdings (%)

Promoters 52.6

Institutional investors 28.5

Others 19.0

Institutional holding trend (%)

26.224.3

19.5 19.4

8.7 8.1 8.7 9.1

0

5

10

15

20

25

30

Q3FY17 Q4FY17 Q1FY18 Q2FY18

(%

)

FII DII


Exhibit 4: Company’s milestone

1992-2000

1.Incorporated private limited

company

2. Production facilities of plastic

drums started in India

3. Launched lifestyle products

(industrrial/retial mats)

4. Expanded in North and

South India

2001-2006

1. Launched automotive related products

2. Started facilities in East India

3. Ventured in Thailand

4. Acquisition of TPL Plastech

Ltd

Pre IPO (Prior to 2007)

2007-2010

1. Entered the battery business

2. JV with Mauser for

manufacturing steel drums

3. Entered Sharjah (UAE)

4. Launched new products plastic fuel

tanks, prefab shelters & disposal bins

5.Acquisition of Kompozit Czech Republic,

to enter composite cylinder segment

Post IPO (from 2007)

2011-2017

1. Acquisition in industrial packaging

segment – Thailand & Taiwan. Expansion

in other overseas geogrpahies

2. Started PE pipe manufacturing

3.Exit from China and South Korea

4.Started MOX films business

Revenue

1999 2008 2010 2011 2017

| 100 crore | 500 crore | 1000 crore | 1500 crore | 2500 crore


Exhibit 5: Established and valued added product range



Exhibit 6: Product specifications and related customers

Products Specifications Customers

Turf & mattings

Duro Turf/Soft: Matts used to scrape off dirt

•Duro Wipe: Matts for wiping water

•Duro Mat: Matts for car use

•Meadows: Artificial grass turf

Manufacturing locations: India(2)

Household, Hotels, Hospital, Multiplex, Etc.

Disposal Bins

Range: 120 & 240 Ltr capacity

Manufacturing Location: India(1)

Household, Commercial, Industrial, Municipal

Corporation, Etc.

Auto Components

Anti Spray Flaps, Plastic Fuel Tanks, De-aerating tanks and air duct

Manufacturing Locations: India(3)

IBCs

Intermediate Bulk Containers (IBCs)

Range: 1000 Ltrs

Brand: GNX bulktainers

Manufacturing Locations: India(3) & Overseas(4)

Capacity:240000 MT

Petrochemicals, Foods, Solvents, Etc

Pipes

HDPE pipes

Range: 20 mm to 1400 mm of pressure range

Brand: Max’m PE Pipes

Manufacturing Locations: India(5)

Capacity: 30000 MT

Irrigation, Sewage, Effluent Treatment,

Desalination Plant, Power Plant , Etc.

Composite

Cylinders

Composite Cylinders

Range: 2kg – 22 kg capacity

Brand: Life Safe


Capacity: 1400000 units

Household, Industrial, Trawlers, Caravans, BBQ,

Street Cooking, Etc

MOX Films

Range: 35 to 320 GSM thickness


Agriculture, Infrastructure, Packaging,

Commercial Vehicles and many more

Rigid industrial packaging: HDPE Drums, Jerry-cans, Pails

Capacity Range: 5 Ltrs to 250 Ltrs

Manufacturing location: India (15) overseas (10)

Chemicals, Petrochemicals, Paints, Etc

Plastic Divisions

Mox Films

Products/Division

Automotive

Source: ICICIdirect.com Research


Exhibit 7: Geographical presence in India and other countries


Exhibit 8: Time Technoplast industrial packaging presence

Company Country Products

Nile Egypt Plastech Industries SAE Egypt IBCs/ Drums and Jerry-cans

Gulf powerbeat WLL Bahrain IBCs/ Drums and Jerry-cans

Elan incorporated FZE UAE IBCs/ Drums and Jerry-cans

Pack Delta Public company Ltd

YPA (Thailand) Ltd

PT Novo Complast Indonesia IBCs/ Drums and Jerry-cans

Yung Hsin contain industry Taiwan IBCs/ Drums and Jerry-cans

Exel plastech Vietnam IBCs/ Drums and Jerry-cans

Q Pack industries Malaysia IBCs/ Drums and Jerry-cans

Thailand IBCs/ Drums and Jerry-cans


Exhibit 9: Global presence through subsidiaries and joint ventures

Enterprises

Subsidiaries/joint

venture

Country of incorporation

Proportion of

ownership

interest

TPL Plastech Subsidiaries India 75.0%

NED energy Subsidiaries India 94.0%

Elan Incorporated Fze Subsidiaries Sharjah, UAE 100.0%

Kompozit Praha SRO Subsidiaries Czech Republic 96.2%

Ikon investment Holding Ltd Subsidiaries Mauritius 100.0%

GNXT Investment Holding PTE Ltd Subsidiaries Singapore 100.0%

Schoeller Allibert Time Holding PTE Ltd Subsidiaries Singapore 50.1%

Time Mauser Industries Pvt Ltd Joint Venture India 49.0%



Investment Rationale

Banking on higher margin valued added products…

TTL’s products can be sub-divided into two categories a) established

products (EPs) and b) value added products (VAPs). The categorisation of

products is based on their margin profile wherein VAPs commands ~300

bps higher EBITDA margin vs. EPs. VAPs category includes composite

cylinders, MOX films, IBCs and DWCs wherein MOX films and DWC are

newly introduced products for the domestic market. TTL is one of the

largest manufacturers of composite cylinders and IBCs in India and

overseas markets. Revenue contribution of VAPs in consolidated sales has

increased to 13% in FY17 against 11% in FY15. During the same period of

FY15-17, VAPs category recorded revenue CAGR of ~25% vs. consolidated

revenue CAGR of ~11% (excluding divested business).

The sharp revenue growth in VAPs category was mainly due to ~4x jump in

revenue of composite cylinders to | 72 crore in FY15-17. On the other hand,

IBCs products saw ~17% revenue CAGR in FY15-17 supported by a strong

domestic performance. We believe VAPs category contribution to

consolidated sales will increase further from current 13% to 23% by FY20E

on the back of a sharp revenue CAGR of ~40% in FY17-20E. Revenue

growth would largely be supported by a) capacity addition of composite

cylinder and IBCs by ~34% and ~12% in FY17-20E & b) launch of new

products such as DWC pipes and MOX films in FY18. We believe increase

in revenue contribution of VAPs would also help drive consolidated sales,

earning CAGR of ~16%, ~25%, respectively, in FY17-20E.

Exhibit 10: Revenue contribution of EPs Vs VAPs in FY15

VAPs

11%

EPs

89%

Source: Company, ICICIdirect.com, Research

Exhibit 11: VAPs contribution in consolidated revenue increased in FY17

EPs

87%

VAPs

13%


Exhibit 12: Consolidated sales CAGR 16% in FY17-20E

2476 2423

2755

3093

3689

4311

0

1000

2000

3000

4000

5000

FY15 FY16 FY17 FY18E FY19E FY20E

(|

crore)

CAGR ~6%

CAGR ~16%


Exhibit 13: VAPs to drive consolidated EBITDA margin

13.7

14.4

14.7

15.0 15.0 15.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5


(%

)


Revenue contribution of VAPs in consolidated sales has

increased to 13% in FY17 against its contribution of 11% in

consolidated sales of FY15


…with established products segment recording moderate growth

TTL’s established products (packaging, pipe and technical & lifestyle)

categories recorded segment revenue CAGR of ~10% in FY15-17 (adjusted

with discontinued operations). This was largely due to the better-than-

expected performance of the company’s piping division, which recorded

segment revenue CAGR of 25% in FY15-17. Plastic product segment

recorded revenue CAGR of 8.4% in FY15-17 owing to ~15% growth in

revenue of overseas subsidiaries. However, the domestic business

recorded muted sales CAGR of ~6% in FY15-17 owing to below expected

performance of energy storage device and technical & lifestyle product

categories. Further, the overseas business contributed ~30% to the plastic

product category in FY17 (largely industrial packaging) with three year’s

average plant capacity utilisation of ~67%. Against this, the Indian business

(with revenue contribution of ~70% in the plastic segment) is operating at

three year average capacity utilisation of 80%. Hence, we believe there is

substantial scope for an increase in utilisation of overseas business given

the lower penetration of polymer based industrial packaging products. This,

along with ~47% YoY increase in piping capacity in FY18 would also help

drive a revenue CAGR of ~11% in established product in FY17-20E. On the

margin front, we believe there would be limited upside in the EBITDA

margin of EPs owing to rising contribution of lower margin piping business

into the category.

Exhibit 14: Higher utilisation, capacity addition to drive EPs revenue

19822073

23872505

2886

3307

0

500

1000

1500

2000

2500

3000

3500

FY15* FY16* FY17 FY18E FY19E FY20E

(|

crore)

CAGR ~10%

CAGR ~11%

Source: Company, ICICIdirect.com, Research, * revenue from continued operations

Exhibit 15: New product launch to help driving revenue of VAPs

237288

370

587

803

1004

0

200

400

600

800

1000

1200

FY15* FY16* FY17 FY18E FY19E FY20E

(|

crore)

CAGR ~25%

CAGR ~40%

Source: Company, ICICIdirect.com, Research,* revenue from continued operations

Exhibit 16: Historical revenue, margin trend of EPs categories

19822073

2387

14.3

14.214.2

0

500

1000

1500

2000

2500

3000

FY15* FY16* FY17

(|

crore)

14.1

14.2

14.2

14.3

14.3

14.4

(%

)

Revenue EBITDA Margin


Exhibit 17: Historical revenue and margin trend of VAPs categories

237

288

370

16.9

17.6

17.2

0

50

100

150

200

250

300

350

400

FY15* FY16* FY17

(|

crore)

16.4

16.6

16.8

17.0

17.2

17.4

17.6

17.8

(%

)

Revenue EBITDA Margin


We believe there is substantial scope for an increase in

utilisation of the overseas business given the lower

penetration of polymer based industrial packaging

products. This, along with ~47% YoY increase in piping

capacity in FY18 (excluding DWC) would also help drive

established product revenue CAGR of ~11% in FY17-20E


Leader in industrial packaging segment

The global packaging industry can generally be classified into two

segments i.e. rigid and flexible packaging. Rigid and flexible packaging can

be differentiated on the basis of use. Rigid packaging is suitable for

bulk/bigger packaging whereas flexible packaging is largely used for

packaging small goods. Under rigid packaging, polymers are largely used

as raw material (51% polymer based rigid packaging) followed by metal and

glass. High polymers demand for packaging is mainly due to rising demand

from speciality chemical, FMCG, food and beverages, pharmaceuticals, etc.

Globally, the industrial packaging (largely rigid packaging like drums,

jerrycans, pails and IBCs) industry is estimated to be ~| 38500 crore in 2016

(grown at ~3% CAGR in 2013-16). Further, global industrial packaging (IP)

industry is likely to grow at 3-4% CAGR till 2020. Growth is expected to be

largely driven by sharp growth in demand of packaging products from

speciality chemicals, petrochemicals, pharmaceuticals, etc. Also, growth

would largely be driven by China, India and other regions in Asia Pacific

due to rising demand from speciality chemical companies.

In volume terms, global demand for industrial packaging (steel + polymer)

grew at ~6% CAGR of which polymer drums recorded ~11% growth in

FY11-16. This was largely led by Asian countries wherein demand for

polymer drums increased rapidly at 14% CAGR in the same period. The

penetration of polymer drums in India is at 55% vs. 10% in rest of Asia. The

Asia Pacific region (excluding India) recorded strong growth in polymer

demand by ~19% vs. ~10% growth in demand from India. This was largely

due to gradual replacement of steel drums with polymer based drums. We

believe, in future demand growth of polymer drums will be largely driven

by Asian countries due to rising demand for polymer drums from speciality

chemical companies in the Asia Pacific region. Also, sacks are gradually

losing market share (due to manual handling process). This will be directly

beneficial for other segment like IBCs and drums.

Exhibit 18: Industrial packaging industry trend

2011 2016 2011 2016 2011 2016

Steel Drums 7.5 10 5.9 90.5 121 6.0 98 131 6.0

Polymer Drums 7.5 12 9.9 5.5 13 18.8 13 25 14.0

Total 15 22 8.0 96 134 6.9 111 156 7.0

IBCs 0.06 0.2 27.2 0.94 1.6 11.2 1 1.8 12.5

Penetration

Steel Drums 50% 45% 94% 90% 88% 84%

Polymer Drums 50% 55% 6% 10% 12% 16%

2011 2016 2011 2016 2011 2016

Steel Drums 98 131 6.0 100 117 3.2 198 248 4.6

Polymer Drums 13 25 14.0 16 23 7.5 29 48 10.6

Total 111 156 7.0 116 140 3.8 227 296 5.5

IBCs 1 1.8 12.5 8 10.2 5.0 9 12 5.9

Penetration

Steel Drums 88% 84% 86% 84% 87% 84%

Polymer Drums 12% 16% 14% 16% 13% 16%

Packaging Products

CAGR %

Packaging Products

CAGR %CAGR %CAGR %

Rest of Asia TotalIndia

CAGR %

Asia

Asia Rest of World Total

CAGR %

Global


Globally, the industrial packaging (largely rigid packaging

like drums, jerrycans, pails and IBCs) industry is estimated

to be ~| 38500 crore in 2016 (grown at ~3% CAGR in

2013-16). Further, the global industrial packaging (IP)

industry is likely to grow at CAGR of 3-4% till 2020

In volume terms, global demand for industrial packaging

(steel + polymer) grew at ~6% CAGR of which polymer

drums recorded growth of ~11% during FY11-16

Global IP market percentage share by 2020

Crates

25%

Drums

21%IBCs

15%

Sacks

25%

Pails

14%


http://www.business-standard.com/search?type=news&q=packaging


India’s rigid packaging industry to grow at 25% in FY15-20E

India being one of the fastest growing nations in the Asia Pacific region

coupled with various demographic advantages will be a direct beneficiary

of a shift in the manufacturing base from China. Also, the country is the

fourth largest producer of the agrochemicals and fertilisers and supplies

finished goods to other parts of the world. India’s industrial packaging

(steel/polymer drums) is pegged at | 2860 crore of which the polymer

drums industry is at | 1445 crore while the rest is contributed by steel

drums. Industrial packaging products demand in India has grown (volume

CAGR of 8% in last five years) on the back of rising demand from the agro-

chemical sector due to an increase in crop yield.

In India, TTL is the largest producer of rigid industrial packaging and

commands ~75% market share along with its subsidiary TPL Plastech. TTL

offers a wide range of products such as HDPE drums, jerrycans, pails and

IBCs, which largely find application in industries like chemicals, paints and

pigments, food & beverages, petroleum, industrial coating, pharmaceutical

etc. According to Ficci, the Indian packaging industry is pegged at US$32

billion (bn) and has grown at 16% CAGR in FY10-15. Of this total size, the

share of the flexible packaging industry is at ~73% (grew at 14% CAGR in

FY10-15) while the contribution of rigid packaging is at ~27% (grew at 21%

CAGR in FY10-15). Further, the Indian packaging industry is expected to

grow at 18% CAGR in FY15-20E to cross the ~US$72-bn mark. Of this,

flexible packaging is expected to grow at 15% CAGR while rigid packaging

is expected to grow at 25% CAGR in FY15-20E.

Exhibit 19: Indian packaging industry to grow at 18% CAGR in FY15-20E

3.38.5

25.912.1

23.3

46.8

15.3

31.71

72.7

-10

10

30

50

70

90

110

FY10 FY15 FY20E

(U

S$ b

n)

Rigid Flexible

CAGR 18%

Source: FICCI, ICICIdirect.com Research

Intermediate bulk container - Big growth opportunity

Global intermediate bulk containers (IBCs) are pegged at | 10,000 crore

while India’s IBC market is at ~10% of the global size. IBCs are large plastic

vessels largely used to store/transport liquid and other materials in bulk. In

capacity terms, IBCs are 4x in size (as big as 1000 litre) compared to normal

polymer drums (that has capacity between 50 litre and 250 litre). Bigger

size, lower manual intervention and durability in transport helps customers

save cost and time. Also, IBCs have a built-in faucet/tap (that is absent in

polymer and steel drums) at the base of the container through which the

liquid content can be withdrawn into smaller containers by attaching pipes.

Further, reusability of IBCs is another factor of rising demand as it is very

easy to clean and store other chemicals. Major clients for this product are

pharmaceuticals, FMCG and solvent companies across the globe.

Historically, demand for IBCs has grown at 27% CAGR (though on a lower

Industrial packaging products demands in India have grown

(volume CAGR of 8% in last five years) on the back of rising

demand from the agro chemical sector to increase the yield

of crop.

In India, TTL is the largest producer of rigid industrial

packaging and commands ~70% volume market share

along with its subsidiary TPL Plastech

The Indian packaging industry is expected to grow at 18%

CAGR in FY15-20E to cross the ~US$72-bn mark. Of this,

flexible packaging is expected to grow at 15% CAGR while

rigid packaging is expected to grow at 25% CAGR in FY15-

20E


base) in 2011-16 to 0.2 mn units in India. Demand growth of IBCs is at a

very nascent stage in Asia, India, clearly visible in terms of penetration of

IBCs Asia, India of 15%, 11%, respectively, compared to global average of

85% (excluding Asia). TTL recorded IBCs sales CAGR of ~17% in FY15-17

led by ~19 volume growth. The growth was largely led by domestic

business (grew at ~23% CAGR in FY15-17) while overseas also recorded a

decent sales CAGR of ~12% led volume growth of ~14% in FY15-17. The

company is likely to increase its total IBCs manufacturing capacity by 40%

to 9.6 lakh units by FY18 (largely overseas). We believe capacity addition

coupled with demand from chemical, FMCG and pharmaceutical companies

remaining intact would help drive segment sales CAGR of ~14% to | 443

crore by FY20E. As IBCs are value added products and command EBITDA

margin of ~18%, rising contribution of IBCs in overall sales would drive the

EBITDA margin, going forward.

Exhibit 20: India has great opportunity for IBCs business

Asia

15%

Rest of the

world

85%

10.2 mn

units

1.8 mn

units

India

11%

Rest of

Asia

89%

1.6 mn

units

0.2 mn

units


Growth in speciality chemicals industry across APAC region to drive

industrial packaging segment demand

The speciality chemical industry has remained a key growth driver for

industrial packaging products demand in the APAC region. The global

chemical industry, pegged at US$3.9 trillion in 2015, grew at 3.5% CAGR in

2010-15. Post the economic slowdown in 2006-09, the Asia Pacific region

has become a favourite manufacturing destination for most global chemical

players. According to E&Y, the Asia Pacific region contributed ~61% to

total global chemical sales in 2015 and is pegged at ~US$2.4 trillion.

Further, Asia’s global market share is expected to reach ~65% in 2030 with

average growth rate of 4.2%. Growth will largely be driven by capacity

expansion coupled with rising consumer purchasing power in the Asia

Pacific region.

From 2014 onwards, major chemical manufacturers have shifted their

manufacturing base from China to other South East Asian regions due to

rising labour, transportation & other production costs in China. As a result,

other Asian countries like India, Indonesia, Vietnam, Malaysia and Thailand

are emerging as strategic manufacturing centres with competitive export

positions. If the current trend continues, these countries are likely to

assume an increasingly important role in the global chemical industry,

which will be a key growth driver for the industrial packaging industry.

TTL has recorded IBCs sales CAGR of ~17% during FY15-

17 led by ~19% volume growth. The growth was largely

led by domestic business (grew at CAGR of ~23% during

FY15-17) while overseas have also recorded a decent sales

CAGR of ~12% led volume growth of ~14% during FY15-

17

According to E&Y, the Asia Pacific region has contributed

~61% to total global chemical sales in 2015 and is pegged

at ~US$2.4 trillion. Further, Asia’s global market share

may reach ~65% in 2030 with average growth at 4.2%

From 2014 onwards, major chemical manufacturers have

shifted their manufacturing base from China to other South

East Asian regions due to rising labour, transportation and

other production costs in China


Exhibit 21: Global chemical industry market share (country-wise)

RoW

1%

Asia

61%

Europe

17%

Latin America

4%

North America

17%


Exhibit 22: Asia Pacific region likely to grow at 4.2% CAGR in 2015-19

2344

4387

0

1000

2000

3000

4000

5000

2015 2020F 2025F 2030F

(U

S$ b

n)

CAGR 4.2%


IP industry highly concentrated among limited players across globe

Globally, the industrial packaging market is highly concentrated with the

presence of only four players viz. TTL (India), Mauser (Germany), Schütz

(Europe), Greif (US). In the global ranking, TTL is in the top position in terms

of polymer drums category while under the IBCs category it is the third

largest player in the world. In India, TTL, along with its subsidiary TPL

Plastech, is a dominant player with ~70% volume market share. The

company has been leveraging 25 years of its existence in the industry by

creating strong relationships with multinational companies over the years.

Exhibit 23: Time Technoplast ranks top in industrial packaging business

Company Polymer Drums IBC

Time Tech 1 3

Mauser 2 2

Schutz 3 1

Greif 4 4



Technical, lifestyle & energy storage devices business to grow moderately

Technical, lifestyle & energy (TL&B) business of TTL includes turf & matting,

disposable bins, auto components and energy storage devices. These

businesses contributed ~14% to the consolidated topline in FY17.

Revenues from this segment declined from | 611 crore in FY15 to ~| 392

crore during FY17 as the company sold wholly-owned subsidiary Novotech

Spzoo Poland and Grass Tech SRL Romania (due to lower profitability). This

coupled with a sharp decline in revenue of batteries was due to lower

demand from the telecom sector.

Technical & lifestyle: The technical & life style product category contributed

~9% to consolidated topline in FY17. The products under this division

include automotive component, plastic entrance mats and artificial grass

products, which find application in poultry nest pads, artificial snow slopes,

etc. Apart from this, TTL in collaboration with Netherlands based Schoeller

Allibert is producing pallets, crates and other containers. Through this

service, the company assists customers reduce their supply chain costs

through improved storage efficiency, handling savings and freight cost

reduction. The growth in sales of mats & storage products is largely driven

by economic growth, improved discretionary spending (especially among

middle class) and increasing penetration of organised retail.

Automotive component: TTL manufactures value added plastic auto

components such as anti-spray flaps, plastic fuel tank (PFTs), de-aerating

tanks (DAT), air ducts, etc for use of commercial and passenger vehicles.

The company serves major auto players like Tata Motors, Ashok Leyland,

Eicher Motors, etc in this segment. We believe demand for TTL’s product

would largely be driven by growth in the Indian commercial vehicle market.

The outlook on the domestic CV industry continues to remain stable in the

near-term as a series of measures by the government to revive economic

growth have started yielding results in some key sectors. These include a

pick-up in execution activity in road & highway projects along with cement

consumption and other allied sectors.

Energy Storage Devices: TTL entered the battery business in 2007 by

acquiring Hyderabad based NED Energy to focus on telecom batteries.

Later, the company entered other battery segments like solar battery,

industrial battery and UPS battery as part of the diversification to reduce

dependence on one sector. TTL has signed an agreement with an Indonesia

based company for supply of automobile battery. Currently, telecom battery

contributes ~50% to total battery revenue (reduced from ~80% in FY15)

while the remaining 50% is contributed by solar and other batteries. The

company is also supplying batteries for e-rickshaw and betting on strong

demand from this segment, going forward. We believe the solar battery

business will drive sales of the battery segment supported by

unprecedented growth of renewable energy in India. The Government of

India plans to increase solar based power capacity to 175 GW by the end of

2022 from ~36 GW in FY15. For the first time, India is also planning to

include energy storage (batteries) as a requirement when a solar project is

tendered. The government has made policies easy and friendly to

encourage and implement generation of solar energy, which will boost

solar battery demand, going forward.

Lifestyle product category

Automotive component

Energy storage devices


Government infra push to drive PE pipe demand for TTL

TTL is one of the largest players in the high pressure pipe segment, which

contributes ~9% to the topline. The company sells these pipes with the

brand name of Max’m PE pipes with the pressure range of 20-1400 mm.

HDPE pipes are capable of handling semi solid & gaseous effluents and has

unmatched resistance to corrosive chemicals. It is lighter and easy to

handle and install compared to heavier metallic or concrete pipes. Further,

these pipes are 100% leak proof. Therefore, these are preferred over

galvanized, ductile iron (DI) and cement. These pipes are largely used in

industries like irrigation, sewage, effluent, treatment, desalination plant and

power plant.

TTL has expanded its pipe manufacturing capacity by 18000 MT to 30000

MT in FY15-17 due to continuous strong demand from various

infrastructure projects. As a result, sales grew at ~25% CAGR in the same

period owing to a sharp volume CAGR of ~28%. However, the company

recorded a decline in realisation by ~3% during the same period as it has

passed on the benefit of lower raw material prices to its customers. Further,

TTL plans to increase the share of the business by adding more value

added products (VAPs) under the construction and industrial category. This

would help drive the profitability of the business. TTL has recently entered

new product categories in the piping segment called double wall

corrugated (DWC) pipe (up to 800 mm diameter). These products are

technically superior and cost effective solutions for drainage and sewerage

systems over conventional DI & reinforced cement concrete (RMC) pipes.

Exhibit 24: Continuous expansion in piping capacity…

18000

30000

53000

0

10000

20000

30000

40000

50000

60000

FY15 FY17 FY20E

(tonnes/annum

)

CAGR 29%

CAGR 21%


Exhibit 25: …leads to sharp volume growth

12412

15905

20347

26968.8 34012.5

35897.5

0

5000

10000

15000

20000

25000

30000

35000

40000


CAGR 28%

CAGR ~21%


TTL has set up three plants for DWC pipes at Silvassa, Pantnagar and

Hyderabad with a combined capacity of 9000 MT. We believe demand from

the DWC pipe segment would largely be driven by government expenditure

in the water & sewerage industry. There are several ongoing and upcoming

projects in Rajasthan, Karnataka, Uttar Pradesh, Madhya Pradesh,

Telangana, etc, for which tenders are afloat and TTL secured major orders.

As on H1FY18, TTL’s PE and DWC pipes order book is at 12,500 MT (~| 150

crore) and 800 MT (~| 9.2 crore), respectively, which will be executed by

the end of FY18. We believe the piping segment will record revenue CAGR

of 21% in FY17-20E entirely driven by volume growth. Since DWC pipes are

in the initial phase of launch, we believe there would be some pressure on

the realisation front. However, a gradual pick-up in demand, going ahead,

would help the company play on the pricing front. Going forward, DWC

pipes would command a premium of ~300 bps on the EBITDA front

compared to normal PE pipe due to its superior quality.


Exhibit 26: Revenue growth to be driven by volume…

151 1

85

235

311

398 422

0

50

100

150

200

250

300

350

400

450


(|

crore)

CAGR ~25%

CAGR ~22%


Demand driver of pipe segments

Water and sewerage infrastructure development in India has been the key

engine of growth acceleration for the pipe industry. With only ~31% of

India’s population currently urbanised and high population density, India’s

urbanisation trends have significant scope to accelerate. Further, the

country faces immense problem of drinking water supply and has poor

transmission & distribution networks for water. According to government

estimates, the Indian water and sewerage (W&S) market is growing at 10-

12% annually.

Future growth in the W&S segment would largely be driven by th4e

government’s thrust to push various social schemes like Housing for All,

Swachh Bharat Mission, Smart Cities and Atal Mission for Rejuvenation and

Urban Transformation (AMRUT). Further, the Government of India has

allotted over | 1 lakh crore to its ambitious water supply projects both for

drinking and sewage on priority through AMRUT and Smart Cities Mission.

Housing for All: To overcome housing shortage, the government aims to

build six crore houses under its twin schemes: - ‘Pradhan Mantri Gram

Awas Yojana’ for rural areas – four crore houses & ‘Pradhan Mantri Awas

Yojana’ for urban areas – two crore houses. We believe housing shortage

along with lack of proper water management system (sewage/drainage) in

slums creates ample opportunity for Indian piping industry.

Swachh Bharat Mission: Under the scheme, the government has mandated

to provide sanitation and household (urban) toilet facilities in all 4041 towns

with total population of ~38 crore. Further, SBM Gramin (rural mission)

aims to make village Panchayats free of open defecation by 2019. Under the

scheme, the government plans to build ~11 crore toilets at a cost of

~| 1,34,000 crore. We believe lack of sanitation and drinking water facility

at rural and urban households creates a huge opportunity for pipe

manufacturers.

AMRUT: Under the scheme, the government plans to develop basic

infrastructure in select ~500 cities & towns. Total project outlay of funds for

five years (FY16-20) will be | 50,000 crore, to be provided by the central

government. The project would help improve existing basic infrastructure

services like extending clean drinking water supply, improve sewerage

networks, develop seepage management, lay storm water drains, improve

public transport services and create green public spaces like parks, etc.


Exhibit 27: Government thrust to push infrastructure to drive demand of PE pipe industry (Budget

allocation)

14008

24130

85969

124107

20010

34211

107757

161978

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

W&S Urban Dev Rural Dev Total

(|

crore)

2016-17 2017-18

43%

42%

25%

31%

Source: Srikalahasti pipes, ICICIdirect.com Research

Focus to increase pie of value added products

Composite cylinder: Driver for future revenue growth

TTL manufactures composite cylinders for distribution of LPG under its

brand “LiteSafe’. It is exporting the same to over 26 countries globally. An

increased focus on safety, ease of use and high corrosion resistance is

strengthening demand for composite LPG cylinders globally. Though steel

cylinders dominate markets due to low price (half the price of composite

cylinders), steel products are susceptible to corrosion, especially in areas

with high levels of humidity, impacting the safety and useful life of

cylinders. Over the years, TTL has received a good response from users

across the world. Hence, it received repeated orders from existing clients.

Though at present the company is exporting cylinders to 26 countries, it

has approval to supply composite cylinders from over 50 countries.

As of now, this product is exported to various overseas markets like Middle

East, Africa and Southeast Asian nations. TTL entered this segment way

back in 2009 by acquiring a controlling stake in Czech Republic based

Kompozit Praha SRO and launched its first product in 2013. The company

has leveraged the manufacturing technology and started production of

composite cylinder in India. Within five years, the company increased its

manufacturing capacity by ~5x to ~14 lakh per annum and, thus, became

the world’s second largest player after Norway based Hexagon Ragasco

[capacity of 2 million (mn) cylinders per annum]. In India, the closest

competitor for TTL is Supreme Industries that has a manufacturing capacity

of ~5 lakh cylinder per annum.

Further, the company has recently completed trial production and testing of

carbon fibre based composite cylinders for CNG for automotive

applications. This has been done for the first time in India. The company

has developed 60 litre & 30 litre non-metallic Type4 composite cylinders.

These LiteSafe composite cylinders offer numerous technical and

operational advantages over steel cylinders. They are explosion proof, less

than one-fourth the weight of steel cylinders, corrosion & rust proof, etc. In

the initial phase of testing, automotive companies have shown an interest in

replacing metal cylinders with composite cylinders to reduce the weight

and improve upon fuel efficiency. These cylinders are likely to find their way

both in the OEM as well as aftermarket. It also has a huge export potential.

TTL is in the process of getting approval from independent third party and

PESO. The company is likely to launch this product by H2FY19 after taking

necessary approval. In India, though oil marketing companies have

recognised the use of composite cylinders, they have not yet come out with

full-fledged tenders as the product is still in the trial phase.

In the last five years, TTL has increased its composite

cylinder manufacturing capacity by ~5x to ~14 lakh per

annum and, thus, became the world’s second largest

player after Norway based Hexagon Ragasco

The company has recently completed trial production and

testing of carbon fibre based composite cylinders for CNG

for automotive applications


Globally, ~250 crore metal cylinders are in circulation with average

replacement of ~24 crore cylinders every year. This suggests a market size

of ~US$6.7 billion (bn). In India, there are 16.4 crore LPG consumers who

uses steel made LPG cylinders. Recently, TTL secured an order of

composite cylinder from Reliance Gas, which has for the first time launched

LPG in composite cylinders of 10 kg and 5 kg capacity in Pune,

Maharashtra. This implies a significant addressable opportunity for the

company like TTL in India and abroad.

Exhibit 28: Composite cylinder to replace existing metal cylinder globally

Advantage over steel cylinders Other specifications

Light weight & ergonomic:

Cylinders are designed for easy handling and are 1/3rd lighter then

traditional metal cylinder

Transparent:

cylinders that will make it almost impossible for vendors to deliver lower-

than-promised quantity

Explosion proof:

100% explosion proof. Withstands three times higher pressure than

traditional ones

Non-corrosive:

It does not corrode or have rust marks like steel cylinders

Eco-friendly:

Majority of materials used are recyclable

Range: 2kg-22kg (largest in the world)

Position: Second largest capacity in the world

Users: Household, Industrial, Trawlers, Caravans,

BBQ, Street Cooking

Exporting to: South East Asia, Middle East & Africa

Composite LPG cylinders


Exhibit 29: Capacity addition on strong overseas demand

700000

700000

1400000

1400000

1680000

300000

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000


(unit

s)

CAGR 41%


Exhibit 30: Strong volume growth in near future owing to fresh demand

102857156279

322494

629000

1015000

1470000

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000


(unit

s)

CAGR 77%

CAGR ~66%


Exhibit 31: Healthy volume growth to drive revenue in coming future

18.0

34.0

72.0

140.0

222.9

329.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0


(|

crore)

CAGR 100%

CAGR 66%


TTL has doubled its composite cylinders manufacturing

capacity to 14 lakh, which would aid the financials of the

company by FY18. We believe doubling the capacity

would drive the volume at a CAGR of 66% in FY17-20E.

However, we believe realisation growth remain muted

owing to the change in product mix


Launch of MOX films to benefit TTL in long run

TTL has launched multi layer multi axis oriented cross laminated (MOX)

films under the brand ‘Techpaulin’ during Q1FY18. The company has

appointed over 27 distributors/dealers in Kerala, Andhra Pradesh,

Karnataka, Telangana and Maharashtra in the initial phase while it is in the

process of appointing distributors and dealers in other states. MOX films

find application in various industries like agriculture, infrastructure,

packaging, commercial vehicles, etc. We believe agriculture and related

industry is the main opportunity area for such products. This product

protects food items in grain storage and pond lining. Techpaulin is used to

cover products, thereby protecting them from moisture and dust.

According to the company, the size of the agriculture films market is

pegged at US$8.6 bn in 2015 and is estimated to grow at a CAGR of 6.5% to

cross ~US$12.5 bn by 2021.

At present, TTL has MOX films manufacturing capacity of 6000 MT, which

would double in the next two years. Being a higher margin (~17% vs.

consolidated EBITDA margin of 14.7%) business, the company’s focus is on

increasing sales by adding more dealers across India (currently the product

has a presence across 200 cities in India). We believe the company will

clock revenue of | 184 crore by FY20E in the MOX films category owing to

aggressive capacity addition and expansion in dealer network.

Exhibit 32: Application of MOX films in various industries


Exhibit 33: Capacity addition in next two years

6000

12000

0

2000

4000

6000

8000

10000

12000

14000

FY18E FY20E

(m

etric

tonnes)

Capacity

expansion ~2x


Exhibit 34: Capacity expansion to lead sharp revenue growth

69

122

154

0

20

40

60

80

100

120

140

160

180

FY18E FY19E FY20E

(|

crore)

CAGR 50%


We believe agriculture and related industry is the main

opportunity area for MOX films. According to the company,

the size of the agriculture films market is pegged at US$8.6

bn in 2015 and is estimated to grow at a CAGR of 6.5% to

cross ~US$12.5 bn by 2021


Diversified client base reduces the risk of dependency

Globally, the company serves over 900 institutional clients. No client

contributes more than ~4% to TTL’s topline. This reduces the risk of

dependency on single clients in case of any adverse situations. Also,

commencement of manufacturing plants near selling markets (18

strategically located plants in India within 300 km range) helps the company

in efficient distribution and inventory management. TTL plans to replicate

the success of its domestic business to other countries by entering into

negotiations with existing MNC clients operating in India. For example, TTL

plans to leverage its years old relation with multinational companies

operating in India and start supplying the same company in other Asian

countries where the penetration of polymer drums is still low.

Exhibit 35: Marquee clientele of TTL



Key Financials

Consolidated sales CAGR of 16% in FY17-20E

In the last five years, TTL’s consolidated revenue grew at ~13% CAGR, led

by notable growth in composite cylinders segment (sales CAGR of 100% in

FY15-17). Though consolidated revenues were impacted by discontinuance

of its operations in South Korea and China in FY16, better performance in

other regions helped drive consolidated sales in FY12-17. We believe TTL’s

consolidated sales will grow at ~16% CAGR in FY17-20E mainly driven by

capacity addition in both EPs and VAPs categories. The company plans to

almost double the capacity of its piping division (including DWC) with the

composite cylinder capacity ~2.5x by the end of FY20E from FY17. Further,

under the industrial packaging division, capacity of IBCs is likely to grow at

~12% CAGR while capacity of the plastic segment is likely to grow at a

relatively lower rate of ~6% by FY20E.

We believe the VAPs category will record revenue CAGR of ~40% in FY17-

20E led by capacity addition and launch of new product category. Under the

VAPs category, we believe sales of composite cylinders would continue to

record a strong performance (with sales CAGR of 66% in FY17-20E),

followed by DWC, MOX films and IBCs categories.

EPs category sales are expected to grow at ~11% CAGR in FY17-20E driven

by both the plastic and pipe segment. We believe plastic segment sales will

grow at 11% CAGR in FY17-20E led by better utilisation at the overseas

business (with ~14% revenue CAGR) while the domestic business is likely

to record sales CAGR of ~10% during the same period. Also, the piping

segment is likely to grow at 13% CAGR in FY17-20E mainly driven by

capacity addition.

Exhibit 36: Capacity expansion on the cards ….

195000

18000

300000

540000

0

270000

53000

960000

12000

1680000

Plastic

segement*

Pipes* Composite

Cylinders^

IBCs^ Mox films*

FY15 FY20E

Source: Company, ICICIdirect.com Research, * capacity in MT, ^ capacity in units

Exhibit 37: … to drive future sales growth

1528

2755

3093

3689

4311

0

1000

2000

3000

4000

5000

FY12 FY17 FY18E FY19E FY20E

(|

crore)

CAGR ~13%

CAGR 16%


Exhibit 38: Historical performance of overseas subsidiaries

FY15 FY16 FY17 FY15 FY16 FY17

TPL Plastech Ltd Subsidiaries India 183.2 186.7 180.3 7.6 8.6 11.3

NED Energy Ltd Subsidiaries India 208.3 127.2 143.7 5.1 -0.7 1.8

Elan Incorporated FZE* Subsidiaries Sharjah, UAE 191.0 196.8 216.2 15.4 24.8 29.9

Novo Tech Sp Z O O Subsidiaries Poland 132.8 48.3 0.0 16.1 2.3 -

Kompozit Praha SRO* Subsidiaries Czech Republic - - - - - -

Ikon Investment Holdings Ltd* Subsidiaries Mauritius 36.3 38.1 62.1 -1.4 -1.5 -0.1

GNEXT Investment Holdinig PTE Ltd* Subsidiaries Singapore 426.4 425.5 462.2 2.6 10.1 13.5

Schoeller Allibert Time Holding PTE Ltd* Subsidiaries Singapore 37.5 39.4 35.5 -0.3 0.7 0.9

Time Mauser Industries Pvt Ltd# JV India -0.8 -0.6 0.0

Total 1215.5 1062.2 1099.9 44.2 43.7 57.3

Revenue PATCompany name CountrySubsidiary/JV

Source: Company, ICICIdirect.com Research, * Year End December, # JV, Profit/Loss considered in consolidation

We believe TTL’s consolidated sales are likely to grow at

~16% CAGR in FY17-20E mainly driven by capacity

addition in both EPs and VAPs categories. The company

plans to almost double the capacity of its piping division

(including DWC) with the composite cylinder capacity at

~2.5x by the end of FY20E


Rising contribution of VAPs to drive margin, going forward

The key raw material for the company’s entire product segment is High

Density Polyethylene (HDPE), which is a crude oil derivative. TTL fulfils

majority of its requirement (~70%) through imports. However, the

company’s major business is based on a non contractual basis. Hence, any

price movement of raw material is passed on to its customers with

immediate effect. In case of contractual agreement (with limited number of

high profile customers) TTL passes on price hikes with a one-month lag.

We believe the addition of new HDPE/LLDPE manufacturing capacity by

low-cost producers in North America, Middle East and China will result in

oversupply scenario for polyethylene (PE) and polypropylene (PP), which

would keep international prices of HDPE/LLDPE stable in the near future.

Even in India, the price of HDPE/LLDPE is expected to be under pressure on

account of recent capacity addition by key players such as 1) ONGC Petro

Additions Ltd (started its two 360 KTA LLDPE/HDPE swing lines in 2017), 2)

Reliance Industries (RIL), which is also a polyolefins major, is on track to

commence its LDPE and LLDPE/HDPE facilities.

Hence, the consolidated EBITDA margin would largely be driven by rising

contribution of VAPs and increase in utilisation of overseas plants.

Contribution of VAPs in consolidated sales has increased from 11% in FY15

to 13% during FY17. The VAPs category commands higher EBITDA margin

(~300 bps) compared to Eps, which contribute ~87% to the consolidated

topline. We believe new launch and capacity addition in the VAPs product

category would increase topline contribution to 23% by the end of FY20E

resulting in higher EBITDA margin. As a result, we believe the EBITDA

margin will increase ~30 bps in FY17-20E to ~15%. However, aggressive

capacity addition in the lower margin piping segment (excluding DWC)

would restrict any sharp increase in margin, going forward.

Exhibit 39: Steel prices witness uptick in price movement

-

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

Jan-16

May-16

Sep-16

Jan-17

May-17

Sep-17

(U

S$/tonnes)

Source: Bloomberg, ICICIdirect.com Research

Exhibit 40: HDPE prices movement remains lacklustre due to oversupply

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Aug-14

Nov-14

Feb-15

May-15

Aug-15

Nov-15

Feb-16

May-16

Aug-16

Nov-16

Feb-17

May-17

Aug-17

($/tonnes)

Source: Crisil, ICICIdirect.com Research

Historically, steel drums were used for packaging industrial products owing

to strength and non-reactive nature with respect to other chemicals. Over

the years, polymer based packaging products demand has seen substantial

growth owing to its quality, strength, competitive prices and durability,

which is better than steel drums. We believe a rise in steel prices (material

of steel drums) would make polymer based packaging products more

attractive. This, coupled with high resale value of polymer drums (~2x of

steel drums) is another critical factor for the increase in demand of polymer

drums in Asian regions.

We believe the new launch and capacity addition in the

VAPs product category would increase the topline

contribution to 23% by the end of FY20E leading to higher

EBITDA margin (commanding ~300 bps higher margin

than EPs)


Exhibit 41: Polymer based products relatively better placed than steel based

Parameters Polymer Drums Steel Drums

Weight (for 200 Liters) 8-10kg 15-23kg

Raw Material Polyethylene Steel

Re sales value ~| 500 ~| 250

Reaction Non reactive Non reactive

Transporation Easy Tough

Durability Rust/Dust free Prone to Rust/Dust

Qualtiy

Largely Seamless (hence better positioned

for transportation and difficult material

handling conditions)

Not Seamless (hence needs manual

inervention during transportation)


Exhibit 42: EBITDA margin to improve with rising contribution of VAPs

339 348

404

465

553

646

0

100

200

300

400

500

600

700


( |

crore)

13

13

14

14

15

15

16

(x)

EBITDA EBITDA margin


Reduction in debt level creates comforts in terms of lower interest outgo

Despite a capex of ~| 300 crore to increase capacity in FY15-17, TTL’s debt

to equity declined from ~0.8x in FY15 to ~0.5x supported by a reduction in

debt level by 11%. The debt reduction happened on the back of a better

operational performance (EBITDA margin increased ~100 bps in FY15-17).

We believe there would be a further debt reduction owing to a better

operational performance, going forward. We model debt/equity of 0.3x by

FY20E resulting in a lower interest outgo.

Exhibit 43: Better operational performance to lead to reduction in debt/equity

104.3

96.2

90.1

83.6 81.678.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0


(|

crore)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90(x)

Interest cost Debt/Equity


TTL is likely to record EBITDA CAGR of ~17% in FY17-20E

owing to stable raw material prices and increase in

utilisation of the overseas business

Despite a capex of ~| 300 crore to increase the capacity

during FY15-17, TTL’s debt to equity declined from ~0.8x

in FY15 to ~0.5x supported by a reduction in debt level by

11%


Strong sales, EBITDA growth to drive PAT at CAGR 25% in FY17-20E

TTL has recorded a strong PAT CAGR of ~16% in FY15-17 supported by

moderate revenue growth (owing to divestment in overseas subsidiary),

expansion in EBITDA margin and lower interest outgo. We believe a further

increase in margin (owing to higher contribution by VAPs) and saving in

interest outgo (due to reduction in debt level) would drive PAT at a CAGR of

25% in FY17-20E.

Exhibit 44: Better EBITDA margin, lower interest outgo to drive PAT, going forward

110

138

147

182

237

288

0

50

100

150

200

250

300

350


(|

crore)

CAGR 16%

CAGR 25%


Exhibit 45: Asset turnover to improve gradually with increase in utilisation of overseas business

1.41.5 1.5 1.5

1.7

1.8

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0


(x)


We believe a further increase in margin (owing to higher

contribution by VAPs) and saving in interest outgo (due to

reduction in debt level) would drive PAT at a CAGR of 25%

in FY17-20E

Fixed assets turnover of TTL has been stagnant in FY15-17

wherein the company divested its South Korean and

Chinese businesses. We believe the turnover will increase

gradually with the increase in utilisation of overseas plant

and stabilisation of new units, going forward


Better earnings growth to lead to expansion in return ratios

We believe a rising proportion of value added products in consolidated

sales would help TTL improve its debt/equity ratio further from here on. In

addition to this, an increase in utilisation of overseas business would also

aid the profitability, thus reducing the working capital requirements, going

forward. Increase in profitability coupled with a reduction in debt level

would translate into an increase in RoCE, RoE, going forward.

Exhibit 46: Increase in utilisation of overseas business to help improve working capital cycle,

going forward

27

32

34

3231 31

0

5

10

15

20

25

30

35

40


(%

)

Net working capital (Excl cash) % of sales


Exhibit 47: Return ratios to improve with increase in profitability

13 1314

15

1718

11 1011

13

1415

0

2

4

6

8

10

12

14

16

18

20


(%

)

RoCE RoE


We believe increase in utilisation of overseas business

would also aid profitability, thus reducing the working

capital requirements

Higher asset turnover coupled with improvement in margin

would help drive return ratios, going forward. This would

also be aided by a reduction in debt from current level


Risk & concerns

Volatility in raw material prices

The principal raw materials that are used in manufacturing products are PE

granules (HDPE, LLDPE, PE). These products are largely imported. These

raw materials have historically exhibited price and demand cyclicality.

Some of these materials have been, and may in future also be, in short

supply. For example, availability of these raw materials and/or TTL’s ability

to purchase and transport these raw materials may be unexpectedly

disrupted by adverse weather conditions, natural disasters or a substantial

economic downturn in industries that provide any of those products.

Hence, in case of any disruption (increase in import price or fluctuations in

foreign currency rates) margins of the company can be affected severally.

Exhibit 48: EBITDA margin movement with respect to HDPE price

1228

1357 1370

14891443

11991148

0

200

400

600

800

1000

1200

1400

1600

FY11 FY12 FY13 FY14 FY15 FY16 FY17

(U

S$/tonne)

0

2

4

6

8

10

12

14

16

18

20

(%

)

HDPE EBITDA margin


Growth in VAPs category not panning out...

We believe contribution of the VAPs category to the topline would increase

from 13% in FY17 to 23% by FY20E led by strong growth in composite

cylinders and newly launched products. However, a below expected

performance of VAPs category along with higher contribution of EPs in

topline would lead to muted topline, bottomline growth. Also, a higher

proportion of EPs category in the topline would lead to a deterioration in

the margin profile (EPs category EBITDA margin of ~14% vs. VAPs

category EBITDA margin of ~17%) and return ratios (as EPs products

category is capital intensive in terms of higher working capital requirement)

of the company.

Risk associated with overseas operations

TTL’s overseas operations contribute ~30% to the consolidated topline

while the domestic business has made considerable investment (~| 150

crore as on FY17) in its overseas subsidiaries/JVs. However, operations in

major geographies like Middle East and South East Asian countries may

face severe challenges in case of inflationary pressure,

geopolitical/economic uncertainties and any competition.

Favourable steel prices may hurt manufacturer of polymer drums

Since steel drums are still largely used products across the world while

polymer based drums, pails, jerrycans are catching up, growth is based on

various qualities including prices. However, any sharp correction in steel

drum prices could make it more competitive than polymer drums (steel

prices declined 36% YoY in FY16 vs. HDPE prices that declined ~17%

YoY). However, steel prices recovered sharply in FY17 whereas HDPE

prices remained lower during FY17).


Valuation

We believe TTL’s established product category will grow at a CAGR of

~11% in FY17-20E, mainly driven by ~13% sales CAGR of the piping

segment. Replacement demand and increase in utilisation level of overseas

business would help drive the growth of the industrial packaging business.

On the other hand, doubling the capacity and new product launches under

the VAPs category would help register strong segment revenue CAGR of

~40% in FY17-20E. The motive behind increasing the revenue proportion

of VAPs category is to drive the profitability of the business. The EBITDA

margin of VAPs products is higher by ~300 bps compared to established

products. This, coupled with no plan to increase the debt level from current

levels, would keep the interest burden lower for TTL, going forward.

Capacity expansion, rising proportion of VAPs, increase in overseas

utilisation and lower interest outgo would help consolidated sales, earning

to grow at a CAGR of ~16%, ~25%, respectively, in FY17-20E. This would

further help improve return ratios (RoE, RoCE to ~15%, ~18%,

respectively).

Historically TTL has traded at lower valuations owing to lower sales growth,

high debt level and lower return ratios. We believe FY16-17 proved to be

fruitful for the company in terms of exit from low-growth geographies,

introduction of higher margin products and reduction of debt level. Further,

though there is no direct competition for TTL, we have compared valuations

with other packaging companies with the same business model (Mold Tek

and Essel Propack). We expect a revival in the business of TTL owing to

major government infrastructure push, continued replacement demand of

industrial products and increase in proportion of higher margin products in

topline. Moreover, a better economic scenario would lead to a further re-

rating of the stock. We value the company on an EV/EBITDA basis by

ascribing EV/EBITDA multiple of 9x FY20E EBITDA. We initiate coverage on

the stock with a BUY recommendation with a target price of | 230/share.

Exhibit 49: One year forward P/E band (x)

0

50

100

150

200

250

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

5x

10x

15x

20x


Exhibit 50: One year forward EV/EBITDA band (x)

0

1000

2000

3000

4000

5000

6000

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

4x

6x

8x

10x


Exhibit 51: Valuation matrix of competitors

FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 FY17E FY18E FY19E FY17E FY18E FY19E

Essel Propack 4759 2388 2512 2857 421 488 569 196 197 232 18 17 18 18 19 18 1.0 0.6 0.7 24 24 20 13 11 9

Mold-Tec pack 886 308.3 360.9 428.9 53 62 75.9 27 31 41.5 20 20 20 22 19 21 0.2 0.2 0.3 35 28 21 18 15 12

Time Techno 5843 2755 3093 3689 404 465 553 147 182 237 11 10 11 13 13 14 0.8 0.5 0.5 29 23 18 12 10 9

RoCEPeer group

Net Profit ROEMcap

(| Cr)

D/E P/E EV/EBITDASales EBITDA

CY14 CY15 CY16 CY14 CY15 CY16 CY14 CY15 CY16 CY14 CY15 CY16 CY14 CY15 CY16

5Yr

Avg CY17E CY18E CY19E

5Yr

Avg CY17E CY18E CY19E

Greif Inc 2877 4220 3617 3324 405 327 353 92 72 74.9 8 7 8 1.0 1.2 1.1 12.9 17.6 23.2 16.7 9 10 9 9

RoE D/EInternational

peer

EV/EBITDAEBITDAMcap

(USD

mn)

PESales Net Profit

Source: Bloomberg, ICICIdirect.com Research


Exhibit 52: Income statement (| crore)

Year end March FY16 FY17 FY18E FY19E FY20E

Net sales 2422.7 2754.6 3092.8 3689.0 4311.5

Expenditure

Raw material 1693.0 1919.4 2152.5 2582.3 3018.0

Employee Expenses 118.1 133.2 141.3 155.7 181.4

Other Expenses 263.8 297.8 334.0 398.4 465.6

Total expenditure 2074.9 2350.4 2627.9 3136.4 3665.1

EBITDA 347.8 404.2 464.9 552.6 646.4

Other income 2.1 2.2 2.6 2.9 3.2

EBITDA (incl. other income) 350.0 406.5 467.6 555.5 649.6

Depreciation 98.8 115.5 133.0 151.2 181.1

EBIT 251.1 291.0 334.6 404.3 468.5

Interest 96.2 90.1 83.6 81.6 78.9

PBT before Exc. Items 154.9 200.9 251.0 322.7 389.6

Less: Exc. Items -19.5 0.0 0.0 0.0 0.0

PBT after Exc. Items 174.4 200.9 251.0 322.7 389.6

Tax 32.6 49.4 64.0 82.1 97.3

PAT 138.1 147.1 182.3 236.7 287.6

Source: Company, ICICIdirect.com Research,

Exhibit 53: Balance sheet

X


share capital 21.0 22.6 22.6 22.6 22.6

Reserve and Surplus 1147.2 1303.9 1430.3 1652.8 1926.1

Total Shareholder's Fund 1168.2 1326.5 1452.9 1675.4 1948.8

Total Debt 601.1 631.0 641.0 611.0 571.0

Deferred Tax liability 39.1 47.1 47.1 47.1 47.1

Minority Interest 76.1 38.4 38.4 38.4 38.4

Total Assets 1884.5 2043.0 2179.4 2371.9 2605.2

Gross Block 1638.0 1833.8 2067.8 2217.8 2387.8

Accumulated Depreciation 617.0 733.4 866.4 1017.6 1198.7

Net Block 1021.1 1100.4 1201.4 1200.2 1189.1

Capital WIP 70.7 86.9 86.9 86.9 86.9

Total Fixed Assets 1091.8 1187.4 1288.4 1287.1 1276.0

Investments 17.6 16.8 16.8 16.8 16.8

Current Assets

Inventory 483.5 547.3 593.1 656.9 767.8

Debtors 491.7 578.2 610.1 727.7 826.9

Other Current Assets 145.3 185.5 216.5 258.2 323.4

Cash 64.2 56.2 45.2 119.5 145.6

Total Current Assets 1184.7 1367.2 1464.9 1762.4 2063.6

Current Liabilities

Creditors 322.7 345.7 406.7 464.9 543.4

Provisions 12.7 17.0 20.0 22.9 26.8

Other current liabilities 199.9 165.6 163.9 206.6 181.1

Total Current Liabilites 535.4 528.4 590.7 694.4 751.2

Total Liabilities 1884.5 2043.0 2179.4 2371.9 2605.2


The consolidated topline of the company is expected to

grow at a CAGR of ~16% in FY17-20E to led by strong

VAPs segment performance

TTL has no major plan to add debt on the balance sheet

as the major capex has been over by FY17. Also, we

believe a large part of the capex is only for maintenance.

Decline in debt level helped in reducing debt/equity from

0.8x in FY15 to 0.3x in FY17


Exhibit 54: Cash flow statement


Profit/(Loss) after taxation 138.1 147.1 182.3 236.7 287.6

Add: Depreciation & Amortization 98.8 115.5 133.0 151.2 181.1

Add: Interest Paid 96.2 90.1 83.6 81.6 78.9

CF bef working capital chg. 333.2 352.7 398.8 469.5 547.6

Net Increase in Current Assets -70.2 -190.5 -108.8 -223.2 -275.1

Net Increase in Current Liabilities 150.2 -7.0 62.3 103.7 56.8

Net CF from operating act. 413.2 155.2 352.4 350.1 329.2

(Purchase)/Sale of Fixed Assets 6.0 -211.1 -234.0 -150.0 -170.0

Others -117.3 96.8 0.0 0.0 0.0

Net CF from Investing act. -111.3 -114.2 -234.0 -150.0 -170.0

Pro/(Rep) of debt -203.3 29.9 10.0 -30.0 -40.0

Payment of Div & Div tax -12.9 -14.2 -14.2 -14.2 -14.2

Int. paid -96.2 -90.1 -83.6 -81.6 -78.9

Net CF from Financing act -306.8 -49.0 -129.4 -125.8 -133.1

Net Cash Flow -4.9 -8.0 -11.0 74.3 26.1

Cash & Cash Equi at beg 69.1 64.2 56.2 45.2 119.5

Cash & Cash Equi at end 64.2 56.2 45.2 119.5 145.6


Exhibit 55: Ratio analysis


EPS 6.1 6.5 8.1 10.5 12.7

Cash EPS 10.5 11.6 13.9 17.2 20.7

DPS 0.6 0.6 0.6 0.6 0.6

BV per share 51.7 58.7 64.2 74.1 86.2

Profitabilitiy Ratio

EBITDA Margin 14.4 14.7 15.0 15.0 15.0

PAT Margin 5.0 5.3 5.9 6.4 6.7

Return Ratio

RoCE 13.3 14.2 15.4 17.0 18.0

RoE 10.5 11.1 12.5 14.1 14.8

RoIC 13.7 14.0 15.0 16.9 18.2

Valuation Ratio

P/E 30.8 28.9 23.3 18.0 14.8

EV/EBITDA 13.8 11.9 10.4 8.6 7.2

Mcap/Sales 1.8 1.5 1.4 1.2 1.0

Price to BV 3.6 3.2 2.9 2.5 2.2

Activity Ratios

Inventory Days 72.8 72.5 70.0 65.0 65.0

Debtors Days 74.1 76.6 72.0 72.0 70.0

Creditors Days 48.6 45.8 48.0 46.0 46.0

Gross Block Turnover 1.5 1.5 1.5 1.7 1.8

Solvency Ratios

Debt/Equity 0.5 0.5 0.4 0.4 0.3

Debt/Ebitda 1.7 1.6 1.4 1.1 0.9

Current Ratio 3.3 3.6 3.3 3.4 3.4

Quick Ratio 1.9 2.1 1.9 2.0 2.0


We expect the improvement in RoE and RoCE considering

1) healthy topline growth backed by capacity expansion

plan, 2) recovery in operating margin and 3) efficient

working capital management turning lower debt/equity

ratio


ANALYST CERTIFICATION

We /I, Abhishek Shindadkar, MBA and Hardik Varma, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report

accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or

view(s) in this report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is

a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general

insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking

and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts

and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and

meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without

prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securitiesis is under no obligation to update or keep the information

current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended

temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this

company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This

report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their

receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific

circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate

the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any

loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the

risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to

change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment

in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in

respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned

in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation

or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any

material conflict of interest at the time of publication of this report.

It is confirmed that Abhishek Shindadkar, MBA and Hardik Varma, MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding

twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the

publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject

company/companies mentioned in this report.

It is confirmed that Abhishek Shindadkar, MBA and Hardik Varma, MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,

publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities

described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and

to observe such restriction.

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them

as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional

target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;

Buy: >10%/15% for large caps/midcaps, respectively;

Hold: Up to +/-10%;

Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]


ANALYST CERTIFICATION

We /I, Sanjay Manyal, MBA (Finance) and Hitesh Taunk, MBA (Finance); Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research

report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)

or view(s) in this report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities

Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has

its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which

are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking

and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts

and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and

meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without

prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current.

Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended

temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this

company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This

report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their

receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific

circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate

the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any

loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the

risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to

change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment

in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in

respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned

in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any

compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts

and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Sanjay Manyal, MBA (Finance) and Hitesh Taunk, MBA (Finance); Research Analysts of this report have not received any compensation from the companies mentioned in the report in

the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month

preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject

company/companies mentioned in this report.

It is confirmed that Sanjay Manyal, MBA (Finance) and Hitesh Taunk, MBA (Finance); Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,

publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities

described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and

to observe such restriction.

November 27, 2017 Time Technoplast...

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