Time technoplast

This is commendable technological achievement.

However, in my opinion, Linking drone market with type-3 cylinder lack any real correlation, apart from being attention-grabbing.

There’s no practical way to link Type-3 cylinders directly to the UAV and drone market growth. Even identifying who is testing Type-3 cylinders for UAVs—let alone their actual users—seems speculative at best.

It’s akin to linking washing machines with cotton production: a stretch too far!

TT ran a fine race recently, and I still like TT. Type-3 cylinders might find uses where smaller hydrogen cylinders are needed, beyond just UAVs, as the market evolves.

D-Holding.

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Of course it is attention grabbing, no doubt whatsoever. And, marketing is their job too.

Having said that, if these are lighter & more cost effective options to batteries, and in the event that they become a first choice above batteries, and maybe an inbuilt feature of drones in the future, then there is some merit in the context.

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They are undoubtedly lighter, but systems using fuel from these cylinders—such as fuel cells—are far from cost-effective at present. Fuel cells themselves, across the many types available, are still very expensive. Getting into those details would be off topic if we were to accurately predict the cylinder’s growth potential

This is certainly a desirable scenario, and many would prefer it over batteries. However, for certain UAV use cases mentioned at the TT’s presentation, affordability remains a significant barrier. Consequently, the prospect of these cylinders becoming a standard feature in drones seems distant. As per my understanding.

At best, In my opinion, we might be lucky to see them go mainstream in 10 years—it may take longer or it may not become mainstream at all and remain niche segment.

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  • Fuel Cells with Type 4 Cylinders: High energy density, longer flight times, and sustainable for large-scale or endurance-based missions but require advanced infrastructure and investment.
  • Batteries: Simpler, more cost-effective for short-term use, and versatile in deployment but limited by flight time and energy density.

The choice between the two depends on the mission profile, operational range, and budget considerations.

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My overall impressions from Q2 FY25 results/call:
Divestment - No overseas business divestment at all for now, last 2+ years confusion is done & dusted. Some businesses (like battery) may be consolidated into one entity & then one location and surplus/out-of-date facilities/equipment will be sold off.

Depreciation - this money goes mostly into automating/re-tooling current equipment to keep them working/efficient.

Fund-raising - as of now an enabling provision valid for 1 year. Use for pre-paying debt, value-added products (IBC, LPG, CNG Cascades) expansion.

Value-added products - CNG cascades utilization is at peak (90%) with expansion delayed by 2-3 quarters & coming on-stream only in Q4 FY25. Not expecting huge growth there in FY25 but overall value-added products seeming to be trending up ~2-3% as overall % of revenue nicely YoY.

LPG - promising for too long but full utilization only since last year, with current normal ~14 kg cylinder being developed with more dealer out-reach; may be volumes will move in next 1-2 years.
Since steel price rise, composite LPG cylinder price is nearer to steel + all associated advantages.

Expecting 790-815 cr FY25 EBITDA & hopefully lesser depreciation & debt improving PBT more.

Optionalities in 2 years, by FY27:
CNG cylinders for auto

Optionalities, but don’t expect to contribute in a big way for atleast 2 years:
Cylinders for drones, oxygen, fire

Tracking points from curr/prev calls:
FY24 - CNG Cascades FY25 sales expected to be ~80-85% more than FY24 with same % profitability. Status - holding up overall.
Composite products (CNG Cascades + LPG) will be overall Rs.1,500 cr revenue in 3 years (FY28?) from TTM (~575 cr)

Discl: Invested since 2018, added more till 2023, never sold, big part of portfolio both by cost(> 10%) & value (22.5%).

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All composite manufacturers claim that cylinders are blastproof, corrosive free but there is no ISO standard on the same…some industries (especially Fire extinguisher) must require guidelines or ISO standard for the usage. Anyone tracking or knowledge on the ISO certification of composite products, please share your views, thanks

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Hi,
I was just going through company plans for next 6-8 quarters and got broader view that company will payoff debt(789cr as per recent data) using QIP of 1000cr and balance amount is used for capex and WC. Management is giving strong guidance for the same. They are paying 23-25cr interest per quarter and if they manage to pay debt completely then all this will flow down to PBT and can make valuation lucrative down the line for 1-2 years. Even management is planning to increase value added product product contribution by 7-8% in next 1-2 years. mostly all seems to be positive with assumptions that demand for the product persist.

Can someone give clarity on below points?

  • How management is linking drone bussiness with new type-3 cylinder.
  • Apart from weight/corrosive nature of existing fire extinguisher , do we have any benefit of composite material and have anyone seen this changes/replacements happening around recently? (management claims that such extinguisher are used in vande bharat)
  • can we assume that margins of value-added product will remains above 18% according to current trend or do we have some commodities price linked with this?

Further discussions are appreciated.

Thanks.

Disc - Invested

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One question if anyone can guide, equity is said to be the most expensive form of funding. Here we are seeing that company is diluting around 10% equity to pay debt. As per rough calculations removing obligation of paying 100cr interest will drop the p/e from 28 to 25-26. However isn’t it just a short term valuation gain as company will need to earn more per share to justify the same valuation due to higher equity?

So is equity dilution positive in some cases or is it always negative?

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There will certainly be short-term pain for EPS, but how efficiently the company uses its funds to deleverage the balance sheet, grow revenue, and allocate resources to its business will determine the company’s destiny.

Further discussions and contrary views are appreciated!

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You can refer to ss from Q2FY25 concall for your first question

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Your thinking is correct the dilution makes you work harder to grow earnings.

But a company without debt gets better valuation than company with debt generally speaking .

Fund raise are always tricky as their timing and cycle of business need to be aligned or generally if fund raise / expansion happens post cycle turns down that leads to low return.

You need to see whether the company will get better valuation with zero debt or not.

Growth could be similar to guided by management as that may not change with fund raise.

Disc - Invested since sometime no transaction off late not qualified to advise.

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U can think of it as a way to grow the company and there would be pain for shorter term but if all falls into place and company takes a leap forward then its should be considered as good.
Generally, 12-13% is the equity capital cost. So if u earn more than that by growing the business and scaling up in various optionality then job well done.

Eg u dilute and u earn more than CAGR 23% in 3Y timeframe. basically doubling the mcap.

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Will there be a short term pain in eps? I was calculating by adding 1000 cr to market cap and adding 70ish crore (100 cr current interest outgo - 27% tax) to PAT and p/e dropped to 26ish from current 28. Please let me know if the calculation is incorrect to calculate the p/e.

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Time technoplast : expands ME : IBC & plastic Drum production

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Covers Time Technoplast

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Timetechnoplast_Order_cascades_feb 25.pdf (2.0 MB)
Timetechno received an order of 40 cr to be executed within a year.

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Announced today. Low cost high performance E-rickshaw batteries.

Are they suppling to Atul & Greaves?

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Being the first company in India to receive this approval gives Time Technoplast a significant competitive edge in the hydrogen storage market, particularly in the rapidly growing UAV and drone sectors.

Make in India and Atmanirbhar Bharat initiatives are expected to drive domestic production of UAVs, decreasing dependence on foreign manufacturers like Israel and USA. The Indian government has been encouraging private sector participation and defense startups to cater to these needs.

India’s domestic drone market for defense applications is projected to grow at a CAGR of around 15-20% over the next five years, driven by both indigenous production and procurement from international suppliers.

Internationally the hydrogen-powered UAV market is growing at a rapid pace, with annual growth rates for the hydrogen drone segment expected to be around 30-40% as of recent projections. The overall hydrogen-powered aviation market, including UAVs, is projected to grow from USD 1.5 billion in 2023 to more than USD 8 billion by 2030, creating significant opportunities for hydrogen storage manufacturers.

International Players like Hexagon Purus (Norway), Luxfer Gas Cylinders (USA/UK), The Linde Group (Germany), Toyota Tsusho Corporation (Japan), Worthington Industries (USA), Air Liquide (France) who are either in overall hydrogen storage market or specifically in UAV cylinders market are growing there revenues by 10-15%.

Disc. - Invested. Biased.

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Poor q3 results . Sales increased by 5% only

They had good volume wise growth

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