Value added products (21% contribution vs 20% in FY21): Composite IBCs (11% vs 10% in FY21), composite cylinders (6% same as FY21), MOX films or techpaulin (4% same as FY21)
R&D team comprises of 30
Time Techno is third largest manufacturer of IBCs globally
Overseas business contributed 32% of sales (vs 31% in FY21). EBITDA margin for domestic operations was ~14.0% and for overseas operations was 13.7%
Company is restructuring overseas business through strategic divestment, proceeds of which will be used for repayment of debt, capex for composite cylinders and for core Indian business
Has manufacturing facilities at 31 locations across the globe (including 21 within India)
Received single largest for Type-IV LPG Composite Cylinders to IOCL of 0.75 mn LPG cylinders to be supplied over 12-months
CNG cascade order book is 250 cr.
Total capex incurred was 185.7 cr. (vs 103.5 cr. in FY21). Capex for established products was 78.5 cr. (vs 67 cr. in FY21), and was 107.2 cr. (vs 36.5 cr. in FY21) for value added products
Key raw material is PE granules (derivative products of oil and natural gas) which are largely imported
KMP and director remuneration: 1.96 cr. (vs 1.64 cr. in FY21)
Number of employees: 2’521 (vs 2’423 in FY21) (no increase in salary of employees or key managerial personnel)
Statutory auditor fee: 40 lakhs (vs 45 lakhs in FY21)
Number of shareholders: 73’356 (vs 37’672 in FY21), price (low): 60.2, price (high): 94.5
Disclosure: Invested (position size here, bought shares in last-30 days)
Good Q2 results. Margins a little down but sales on track. Margins will improve coming quarters with decline in crude prices.
Their strategy of improving product mix is working well. At expected EPS of 12 price should be 150.
Just an additional observation - the cash flow from operations has improved to ~175 Cr vs ~110 Cr last year on account of better management of working capital. Going forward the key monitorable has to be the debt reduction and finance cost.
As they have the pass through mechanism of raw material inflation, believe raw material reduction will also be passthrough to customers. Also the raw material they directly related to crude prices but the price is more to do with supply - demand.
Company came out with decent nos, with 12% YOY sales growth and flat PAT. Concall notes below.
FY23Q2
Packaging product order book is monthly
Growth was driven by overseas business (21% YOY vs 8% for India)
Pipe business target is 200 cr.+ in FY23
LPG cylinder: 80% domestic + 20% exports. In recent quarter, export mix increased to 40% due to higher rainfall resulting in changing demand schedule from IOCL. Running at 85% capacity utilization. No planned expansion until they get order from other OMCs
Guiding for 1%+ improvement in EBITDA margins and 20%+ revenue growth in H2FY23
Generally, H2 is 55% of business
Expansion of Supreme Industries in LPG composite cylinders is because they don’t have enough capacity to service current order book. Even after their expansion, Time’s capacity will be higher
CNG on-board cylinder marketing will start only after expansion is complete
Disclosure: Invested (position size here, bought shares in last-30 days)
If they can crack LPG market this company can triple its sales… and price can reach 500… CNG cylinder market is very small compared to LPG. but it takes a lot to get the PSU oil marketing companies to move… in so many years they have managed to get one order from IOCL!
I think after IOCL it will happen sooner than later…
Company is going to show best ever results in q3 and q4 FY 23. They should expand composite capacity faster and launch composite for cars.
2 big triggers
composite cylinder for cars
composite cylinders for LPG - they need to get larger orders from IOC and also other OMCs.
In order to meet growing demand for Type - IV Composite Cylinders for CNG Cascades, Management is undertaking capex in a phased manner:
Phase - I (FY 2022-23)
The Company is increasing the manufacturing capacity by 300 cascades (18,000 cylinders) in FY 2023 with a capital outlay of INR 55 Crores.
With the above expansion, the total cascade manufacturing capacity will increase from 180 to 480 cascades (28,800 cylinders) by March 2023.
Phase - II (FY 2023-24)
Under Phase-II, Management has already undertaken expansion program to increase the capacity by further 600 cascades (36,000 cylinders) and the same will be completed in Q4 FY 2024 with an outflow of INR 125 Crores. Total cascade manufacturing capacity after completion of Phase-II will be 1,080 cascades (64,800 cylinders) per year from March 2024.
Time Techno came with very good results when compared with other packaging cos. Sales grew by 20% and EPS by 14%. Company is on track of exceeding 350 cr. in composite CNG and LPG cylinders in FY23 and can do 500+ cr. in FY24. Concall notes below.
FY23Q3
Received 134 cr. order for CNG cascade from Maharashtra Natural Gas Limited
Divestment will be announced in 3 months, process is a bit delayed as International business did very well in 2022 and valuations will be driven by CY22 nos (& not on CY21 nos)
CNG cascade expansion: FY22 capacity was 180 cascades (10’800 cylinders). By March 2023, capacity should increase to 480 cascades (@55 cr. capex; 18.33 lakhs/cascade). This should further expand to 1080 cascades (64’800 cylinders) by March 2024 (@125 cr. capex; 20.83 lakhs/cascade)
Pipes and Mox film business have grown slower in FY23 vs other businesses. Pipe business has revived with cooling off PVC prices
CAPEX: 169 cr. in 9M, includes 53 cr. towards capacity expansion, re-engineering automation for established product + 116 cr. towards value-added product
Expect 1200 cr.+ revenues in Q4FY23 and 15% growth in FY24 (established products should grow at 10-12%, and value added at 25%+)
IOCL has renewed their LPG cylinder order
CNG + LPG revenues will be over 500 cr. in FY24 due to limited capacity
In a normalized scenario, working capital for established products is 110 days and is 70 days for value added products
Have applied to PESO for approval of oxygen cylinders
Disclosure: Invested (position size here, no transactions in last-30 days)
Wonder why valuation of company is so low inspite of very good numbers.
Low debt and good credit rating.
Demand more than supply in high margin composite business.
100% Pledge released. Sales have increased by 18% annually, Margins stable. Receivable and inventory days have also marginally improved.
Decent results by the Company.
Another good set of results, with sales and EPS growing by 15%. Company has scaled their composite CNG and LPG cylinders to 345 cr. and are now hoping to cross 500 cr. in FY24. Concall notes below
Capex: 223 cr. (87 cr. towards established products + 137 cr. towards value-added products)
CNG cascade capacity of 480 cascades (28’800 cylinders; 300 cr. potential sales & 90% utilization) has come onstream and is fully sold out (current order book of 260 cr.). Phase II expansion will be fungible between hydrogen and CNG cylinders
Divestment of overseas assets will finalize by September 2023, currently looking at alternate options as well (like selling assets in different geographical markets to different customers)
ROCE will be 15-16% in FY24 and exceed 20% in 3-years (without taking divestments into account)
Overseas split: Asia (50%), Middle East (34%), USA (16%)
Rate of interest is 9.25% (blended with overseas). Has increased by 1.5%
Disclosure: Invested (position size here, no transactions in last-30 days)
Thank you for the notes - I think they’re being conservative with CNG cascade peak revenue possible. 180 cascades capacity = ~150 cr revenue in FY23; with 480 cascades capacity at full utilization ~400cr revenue should be possible, though current order book is 260 cr.
What I’m worried about is 2 years back during their analyst day, LPG was touted to be the biggest growth driver, while CNG Cascades was considered a relative optionality. There doesn’t seem to be much movement with Indane after the initial + repeat order of ~7L cylinders. There are ~29 cr gas connections = 58 cr cylinders. 25% conversion is ~14.5 crore cylinders, which is about 100x current Type-IV LPG cylinder manufacturing capacity in India (Time Techno = 1M, Supreme = 0.5M).
Agree… LPG is bigger opportunity - superior product as safer and lighter. can be very useful in rural areas/ last mile connectivity where cylinders will always be used…
Somehow they are not able to grow that business.
Order Book-260 Cr
Current Annual Capacity- 480 which could generate 300 Cr Revenue.
Expansion phase-II-600 no by Dec’23
•125 Cr Capex required which will be funded through internal accrual.
•Fungible between CNG & Hydrogen
Capacity after phase-II -1080,which could generate 800 Cr,assuming 90% utilisation.
Oppertunity of onboard Vehicles to unlock yet
No other Indian manufacturer
Some players import & assemble
In the next 5 years Composite can become 2000-2500 Cr revenue
~ LPG
Capacity-1.4 million
Capex not planned this year.
Can be taken next year depending on feedback from other Oil Marketing player.
~Re-structuring
Timeline- Sep’23
To be based on 2022 year no.
Each 3 continent business to sell seperately.
Objective of Restructuring in intact as earlier ( Debt, Capex & Share holder)
~ ROCE Guidance
13.5/16/19/20+% by FY 23/24/25/26 respectively.
Earlier guidance given is intact.
Following factor to help that
•More contributions Value added,
•Reduction in Working Capital
•Margin expansion
