Time Technoplast Limited (TIMETECHNO.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Time Technoplast Q1 FY '26 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Ashish Poddar from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.

Yes. Thank you, Pari. Thank you all the participants to join us today for the Q1 FY '26 earnings conference call of Time Technoplast. We have the senior management of the company available for the discussion on the financial results, business strategy and the growth outlook of the company. Now I hand over the call to Mr. Bharat Vageria, Managing Director of the company, for his opening remarks, post which we will open the forum for question-and-answer session. Over to you, sir.

Yes. Thank you, Ashish, for introducing us. Good afternoon to esteemed investors, respective colleagues, and thank you to team of MOFT for the kind introduction. It is both an honor and a pleasure to address you today as we present our financial and operational performance for Q1 FY 2026, along with our outlook for the remainder of the fiscal year. I'm pleased to share that our positive momentum has continued into Q1 FY '26 with the volume growth of 14% year-on-year and corresponding 10% increase in the revenue. The difference reflect on account of the lower [ half ] the input cost, which is approximately 4% to 5%, which tempered the revenue growth. Nonetheless, the demonstrated strong operational resilience, maintaining healthy volume while optimizing revenue in dynamic market environment. The composite product, especially CNG segment emerged as delivering good growth of 20% around, playing a pivotal role in our overall performance. Together with the strong results from the other composite product, we achieved an impressive overall 18% growth in composite volumes. Notably, our profit after tax increased by 20% year-on-year, underscoring our continued focus on the capacity utilization, prudent financial management, particularly in controlling finance costs and continued process of automation and reengineering to reduce the cost and make available the product at a competitive price. We are further encouraged by the sustained demand for Type 4 composite cylinder as evidenced by healthy order book for approximately INR 175 crores. This positive trend is complemented by growing interest in our value-added offering, including LPG, CNG composite cylinder simultaneously. Our Industrial Packaging division continued to deliver steady performance. We are also pleased to announce a confirmed order pipeline of approximately INR 425 crores in packaging solutions for the current calendar year, covering both domestic and international markets. This result underscores the strength of our diversified business model and solid foundations and the rich distribution for the business across 10 countries. And if I count including India, it's 11 countries. We remain focused on the capturing emerging opportunities and accelerating our journey towards a sustainable environment responsible growth, delivering long-term value for all the stakeholders. With that now, I invite you to join me to delve into the key highlights of our financial performance that are presented in the result. We have, in fact, loaded on the BSE, NSE, our earnings presentation also. But once again, I am reading that. During the Q1 FY '26 on a consolidation basis compared to previous same year of Q1 FY '25, sales stood INR 1,354 crores as against INR 1,231 crores last year. And EBITDA is INR 196 crores against INR 175 crores, profit after tax, INR 95 crores against INR 79 crores. In terms of the percentage, which is represented by sales -- net sale revenue terms increased by 10%, which includes India 8%, overseas 14%. Volume growth, 14%; 12% India, and overseas 17%. EBITDA margin increased by 12%. PAT increased by 20%. Q1 FY '26 OIBDA margin rose 14.5% to 30 basis point improvement from 14.2%. Our overseas subsidiaries also delivered a strong result in Q1 despite global uncertainties. This performance was driven by volume growth, outpacing revenue growth supported by the lower raw material cost and corresponding price adjustment passed on to the customer because we have a relationship with the customer, and we are directly having B2B business. Share of the business, established products versus value-added product is increasing trade, recorded a strong growth of 15% value-added products compared to previous year, while our established product line grew 8.3%. Doubly, the contribution of value-added product to the total sales increased to 26% from 25% the previous year, reflect to a continuous focus on the innovation and the higher-margin offering. Our share of the India and overseas business is 62% and 38% as against last year was 63% and 37%. EBITDA margin in India and overseas almost on the same line, which is in India, 14.7%, overseas 14.1%, respectively. PAT margin in India and overseas 6.5% and overseas 7.9%, respectively. Cash from operating -- there is a positive net cash from the operating activity is around INR 116 crores. As company has a focus for reduction of the debt for every quarter, this quarter also debt reduced by INR 37 crores. Total CapEx in the first quarter is INR 43 crores, which includes towards the regular maintenance CapEx, expansion, automation, reengineering INR 20 crores and INR 23 crores value-added products that is called IBC and composite products. I would like to draw your attention to a couple of the interesting development, which the -- during the development, which have been seen. Especially, I'm pleased to announce in the history of the company, first time that bonus share is announced, 35 years have been completed operations of the company. The Board have recommended for the approval to -- in the meeting held on 11th August yesterday and announced the bonus of 1 raise to 1 face value of INR 1 fully paid up equity shares of the company held by the members of the company as on the date of the record dates. This is subject to approval from the members at the ensuing 35th Annual General Meeting of the company, which is scheduled on 11th September 2025 and other regulatory required approvals for issue of the bonus. Another sale of the noncore assets, focus is still continue. If I recall my discussion 2 years back, company decided and identified noncore assets worth of INR 125 crores, which is now reduced to INR 47 crores, and this money realized and used for the CapEx and reduce the borrowings, et cetera. And this focus balance also will be targeting to complete in the next 12 months' time. Now -- as again, I'm repeating that focus on improving the ROCEs continue and ROCE can be increased by increasing the productivity, increasing the margin, increasing the capacity utilization, reduction the working capital cycle time, that focus will continue. I recall in my discussion that we had said 3 years back, ROCE should be 14%, 16%, 18% and 20%. 4 years, company had made a target achievement. I'm pleased to tell you, last 3 years, we have achieved that target what was capped by the company, 14% achieved, 16% achieved and the '25, 18% achieved, now targeting for ROCE of 20% for FY '26. This will be, again, continued focus on the cost reduction through automation, reengineering, automation, optimizations, working capital cycle time, strategy and development of the newer products, which have a higher margin. Consolidation of the products and manufacturing unit is also continuing for the cost reductions and optimization of utilization, considering the logistic cost from one unit to our customer. Because you know the -- India, road and infrastructure is increasing. So based on that, our team is analyzing how we can reduce the cost of the logistic and wherever cost of logistic is cheaper than the running the separate unit. So our team is regularly keeping focus on that. And accordingly, based on their decision, we're consolidating our operations of the units. Then again, I'm just repeating. QIP approval, which was taken last year is still continue, and it is valid till November 2025, especially purpose was also mentioned at time, QIP is for reduction of the debt. And again, for the automation, reengineering CapEx plan for the value-added products, then certain new product -- greenfield product, which is taken by the company, like for sustainability point of view, for expansion. As a company in the polymer packaging products where company need to do some strategic compliances to have to consume their packaging material buyback arrangement from the products, which we are supplying after considering the exemption granted by the government notification, the product which have been exported from India, the product which is supplied for the pharma packaging, food packaging that have been excluded. So to have any statutory compliances, because we are a law-abide company, the company has undertaken project expansion for that, the new company has already formed and we have intimated to the exchange regarding Time Ecotech Private Limited that will take project for the sustainability across the India in 3 regions, Western regions, Eastern region and South region. First plant will be come out in the current financial year only, and that will be in the Western region in Gujarat. The place is already identified. The company has entered into agreement for buying of the premises, ready premises. And I'm quite hopeful in the next 3 to 4 months, that the plant will be commissioned completely. So QIP is the involvement of the various purpose, as I mentioned to you. So it will be the right time considering that and to go for the QIP. Then recently, we have done certain development done in the R&D, especially as you know that we are focusing on the development of the newer product, which is a higher margin and high technology-based product, especially we have signed -- we are doing in the composite cylinder, LPG applications, CNG applications, hydrogen application, gas applications also. The company technical team has made an agreement with the company called Drone Stark Technologies, who is already existing manufacturers for the drone. Presently, all the drone, special drone is manufactured by him -- by using the energy storage devices, mainly called batteries. But yes, we have seen -- so we will do very close working, signed the exclusive MOU with them for the 3 years for development of the hydrogen cylinder we have. We have already approval for Type 3 and Type 4. The cylinder will be used for the drone applications. So initially, the drone applications will use hydrogen cylinder and give the performance. And based on that, we will -- able to supply by use of this technology for supply of the cylinder for the drone applications because we all know that drone market is going to be various uses of the drones are there. Various sectors are using in surveillance, agriculture, then this fire department, so many other -- police department, government authorities, all using the drone application is going to increase. So we thought it's a quality performance-wise, height-wise, is very good cylinders, hydrogen cylinder, which have a better performance. So we are going to develop this along with the drone manufacturer. Now our focus is continue for the green energy conversation of electrical unit by using the solar power. I mentioned in my last call also, again, I'm repeating, we have around INR 15 crores units requirement annualized in India. And if at all, all the states that units are available by solar, then we can sign the contract. But currently, some of the states have that policy like Karnataka, Uttarakhand, Maharashtra, Gujarat and that is called -- Uttarakhand, I told you, then Gujarat, Maharashtra and Tamil Nadu. 5 states have that policy. So we have already signed the contract. So this year, half year, we'll get the benefit of the solar power where the saving working out around INR 3 per unit. So in terms of the units, I can say around INR 8 crores to INR 10 crores company will be able to save by way of purchasing the solar. But overall focus is continue wherever possible to buy the purchase power agreement by the solar. I am once again clarifying you, company is doing the equity investment for a longer period, maybe 15 years or 20 years, that the face value will be written back to the company. In addition to that, company will get the committed units, which have been signed and we'll get the benefit for 10 years or 15 years as per the agreement value for the units for which the agreement have been signed. So it's quite substantial benefits can occur in the period ahead. Then as we are in the energy storage devices, the company in the last call also, I have told that there were the 2 companies we were having earlier like NED Energy Limited, which was a subsidiary of Time Technoplast. And NED Energy was having a step-down subsidiary of Power Build. So in the last 4 to 5 months, the exercise ongoing for the merger, that merger process has been completed. Now the Power Build batteries is directly owned by the Time Technoplast Limited for the 97% equity is owned by the company. Now in that, company has taken the project for development of the newer batteries, which includes E-Rickshaw batteries, low-cost batteries and that's quite -- the results on the batteries is very good and very satisfactory. So company has submitted and expecting that approval from the government authorities in the next 30 to 45 days because samples already submitted and is under testing process with the government ECAT, we call it the institution authorities in Delhi. So we have submitted for the batteries for the approval. Another batteries for the power sector batteries and the power expansion in India is ongoing. That battery is also -- preparation is on. We will -- already in the process of submitting our sample for use of the batteries for the power system. As per my technical team experts, we are going to get that approval also in the next 3 months' time, the batteries, which can be used for the power sector also. Now as I mentioned to you, the new sustainability focused subsidiary, Time Ecotech Private Limited, which is mainly for use of the quality recycled material, which otherwise is not available in India because company has various polymer products and this law has come out only for the packaging products where company needs to have a system of collecting back for the approximately 30% of the packaging product after exemption, which is supplied to the customer. So we are already in the process of appointing local agents to get the material back, reprocess, recycle and use as per the application. So we are -- till we start our own facility, we have made arrangement with the local vendors, developed one vendor and identified some agents who are supplying the material, collecting back from the centers and getting reprocessed back. So we can have an extended process with responsibility can be complied. Then I have mentioned in this also, I think nowadays, everybody talks about the impact of the U.S. tariff, which is ongoing. I can say that since April, there is some confusion is ongoing, what is the tariff available applicable to Indian products, which is exported in the U.S. I'm glad to tell you that your company is having manufacturing operations in U.S. and the products which is manufacturing in U.S., it is for the local countries only, not export to the other countries. So it's because of the voluminous nature of the product -- is the voluminous product. So we are not much, I can say, the major effect regarding the tariff of the U.S. operation. Very small items, inputs, which is exported from the other countries, which is used in manufacturing in terms of the value, it is hardly 3% to 4% of their inputs, which they are importing from the other countries. Now I would like to open the floor to answer the specific questions, if any, which I have not covered in my speech.

[Operator Instructions] First question is from the line of [ Shashi Ranjan from Anandan Capital. ]

Congratulations to the entire team for the first quarter, very good result. That is usually not that good, but it is -- this time it is quite good. So just one question, which -- after which I'll come back in queue that it is about Time Ecotech Private Limited. I understand that TEPL is a low-margin business over the ones we have. So why do the CapEx is being done there? It is because of only extended producer responsibility or -- and what is the revenue coming out of TEPL and the revenue from the Power Build and visibility -- revenue visibility on that, sir?

Yes. Anything else or this is it?

This is the one question. As I've been told to ask only one question, I'll come back in the queue later.

Okay. Yes, yes. I think your question is nice. And one thing I'm telling you, if any reprocessed material, it's a one thing, it's a statutory compliance, we have to fulfill that -- we have to fulfill. Second thing, the material which is available, recycled material because when the drums which as a company is selling, I have to make the arrangement to buy back through the agents, which I'm going to do that. And that material is going to be used in the process back. So there is no any cost increase will be there because as I'm responsible, my customers are also responsible. So whatever cost will be there, that will pass on to the customers only. I'm just giving you one of the example. In India, we have to do it our own plant because we have a various product. We want quality assurance. Therefore, company is doing our own plant. And it's a requirement, and it is not going to affect the profitability of the company, cost of the product, cost of the item, recycled material, including cost of the capital investment, everything will be count when we worked out the cost of that raw material. And it is not going to be cheaper also. It will be the price difference between the cost of the procurement of the drones back plus the reprocessed material equivalent to the virgin raw material, which otherwise we are buying from the local manufacturer. So company, when considering this price, there is no effect on the margin will be there. And as far as financing part is concerned, company has adequate internal [ documents ] available and CapEx plan for the normal CapEx automation engineering is already there. And this is in the period of 2 to 3 years, the 3 region will be covered. This year, only the one region, Western region, which has a very, very high requirement is there and the availability of the recycled drums from the markets are available. So first plant will be the Western region. Next year, we will see the Northern region and then after the Southern region. So it's a 3-year plan compliance for the statutory compliance as well as margin will not be affected while working out the cost of the product.

Sir, sorry to interrupt. My question was on the revenue visibility for the TEPL and Power Build. I understand that this is a 60,000 metric ton recycling plant, TEPL I'm talking about. So just help me with that.

I think you [ have a ] mix up. I will tell you. Power Build is a different Power is the energy storage devices, there is no any compliance, any point of view. Power build is an energy storage devices, which I mentioned to you, 2 batteries is under process of approval, that is E-Rickshaw batteries, another battery is power sector batteries. As far as this energy storage devices division is concerned, our revenue is in the range of INR 125 crores and in which we are counting E-Rickshaw batteries around INR 35 crores to INR 50 crores we have taken into consideration. Now the Time Ecotech Private Limited, which you are talking, right? You are talking the recycled materials side, right?

Yes, sir. Yes, sir.

Yes. So that is entirely different from the Power Build. Now this is, as I mentioned to you, it's a statutory requirement and no cost increase to the company. Company will be able to maintain the EBITDA margin for overall the product -- packaging product impact. You have seen that company packaging products which constitute to almost around 75% of the total revenue, which includes 37% from overseas revenue. And I'm glad to tell you, overseas unit, already, we are getting some quality of the recycled materials available, and we are using our overseas plant. So we have no any means new technology or something. We are already experienced. But in India, that recycled quality material is not available. Therefore, we are putting our own plant to give the 100% guarantee, 100% product success for the finished products.

The next question is from the line of Jatin Damania from SVAN Investments.

So sir, just wanted to understand now given the growth that we have seen in 1Q coming from Cascade business with 18% volume growth. So how do we see a growth because now Type 3, we have already got an approval, Type 4, we are about to commission. And now with an MOU signing with a draw, how do we see a growth assumption for FY '26-'27 for the Cascade business and the revenue as a whole? And second part to the question on the cylinder front, we were also in touch with ROCE for a couple of orders which are supposed to come in Q4, which was got delayed in Q1. So you can give an update on that before I come back in the queue for other questions.

Yes, yes. Jithin-bhai, I think you are talking composite cylinder, you recollect my transcription, which I have said last time. As far as growth part is concerned for '25-'26, we are estimating 10% to 12% growth for the packaging products, around 28% to 30% growth for the composite products, which include LPG, CNG, hydrogen, other composite products all put together. So we are on that line only working out. As far as -- because, where you know that in composite products, we have already developed fire exchanger, which is also under process of BIS approval by our one of the customers. Another some from the automotive sector composite product, we have developed that also, we are regularly supplying like air receiver tank, and fuel tanks, et cetera. Then hydrogen cylinders, you are talking drone application. This R&D MOU have been done. This is the future of the business. Type 3 and Type 4, nothing to do. Type 3 because Type 4, I don't have a capacity currently, the new capacity, which you are aware that it is to be come out in the second half of this year. And we are in the process of completing our all other formalities, including the building completion in this first half of the year. The work is on, but there is some delay because of the rainy season is continuing and delay in getting the completion of the construction of the building. So we are linking our import consignment directly considering the -- as the building complete, we get the power connection, we get it I think, transfer from our -- this overseas supplier. So it is going to take in the second half of this thing. Now another thing as far as LPG is concerned, regular business with the existing customer, IOC is already there. And you have seen BPCL, HPCL also discussion is on, and they have also started to utilizing the LPG cylinders. So composite product all of the year, I think better clarity will come in the Q3 of this year, but we are sure to achieve the growth of -- in the range of 28% to 30%, especially in the composite products.

Sir, and a follow-up on this on your value-added product, which is around 25% to 27%. With the commissioning of Type 3, what sort of value-added mix you can see by end of this year and probably in FY '27?

I tell you 3 years, as I mentioned to you, I can't see the further because everything, but as far as we are not affected by the tariff for this thing, this is for the local consumption of the industry. So at least 2, 3 years visibility as composite product after expansion also, we are quite confident about to achieve the growth of 30%, as far as composite product is concerned, LPG, CNG, hydrogen, all automotive composite product, everything.

Sir, I have a couple of more questions, but I will come back in the queue.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Yes. So just a clarification. First, I mean, next 3, 4 months, we were talking about some plant being commissioned. So which plant we're talking about here?

In fact, because certain new plants which are coming from India, especially, but when just Jatin has asked me, about the expansion plan of the composite cylinder, CNG, especially in consolidation because currently, we are manufacturing our CNG and hydrogen cylinder in the 2 places, some part in Daman, some part in Silvassa. But we are linking because my existing capacity is equivalent to 30,000 cylinder we can produce, which is going to be increased by another 36,000 cylinders. And you know the cascade [ meet the ] 60 cylinders. So in the current -- in terms of the cascade, we can say 480 cascades can be manufactured in a year as per the current capacity. Or last year, company took the expansion by increasing the capacity from 480 to 1,080; 600 new expansion means 1 cascade 60 cylinders so totally 36,000 cylinders in a month. So that expansion plan is coming nearby Vapi in the Gujarat only. So I'm talking about that plant only. That is going to be started in the second half of this year.

Okay. So sir, the capacity will increase from 30,000 cylinders?

Yes, of course, of course, capacity, which is currently hardly 480 cascades, which will generate the value of around INR 350 crores only. But after the expansion, definitely, which is coming about 300 cascades, the total business can be generated around -- INR 700 crores business can be generated from CNG and hydrogen together.

Okay. And this 30,000 cylinders we're talking about per month, right?

30,000 cylinder yearly. Yearly. I'm talking 1,080 cascades yearly.

Fair enough. I got it. And just a question on the drone parts. So what is the potential we can see in that particular space?

We have not yet counted, but I'm telling you, as I heard from the drone industry, there is new -- many new companies are coming in India. We are not going to manufacture drone, I can tell you. We are going to develop our hydrogen cylinder for drone applications because drone market, as per the current, what I heard, it should be 75 billion by 2032. That is the estimation is given available in the public resources. So we thought the specific -- we can get a good realization, good value and green energy, and it is really very, very -- we can have a Make in India, and we can support to the drone industry. And all the batteries are the Chinese batteries currently today. So at least we will replace it from the hydrogen cylinders, which have a light weight, then they can fly more time, they can fly on the higher height. There are multiple advantages. So we thought let us first do R&D, let's tie up with some of the drone manufacturers. So we have tie-up with the existing experienced person who is specialized, who has already experience of supplying 50 drones -- 50 to 60 drones in India. So we thought it's better to have a tie-up with him. So our cylinders will be used there. And then we will take the experiment of supplying the -- our batteries, our cylinders for the drone manufacturer.

The next question is from the line of [ Deep Shah from New Venom Capital. ] Sir, as there is no response, can we move to the...

Okay. Fine. You can take the next one.

The next question is from the line of Ankur Savariya, an individual investor.

Congratulations on a good set of numbers again, sir. My question is regarding -- as you see that from last 2, 3 quarters, we have given very good results. But since that you have announced that you are willing to go for a QIP, the share price is not going up. So are you comfortable in going for the QIP at these valuations, sir, after the company is doing so well for last 1 year, 2 years?