In This Article:
Time Technoplast Limited (NSE:TIMETECHNO), a ₹28.7b small-cap, operates in the basic materials industry which can be affected by shifts in consumer spending and exposure to fast moving consumer good (FMCG) producers. Basic material analysts are forecasting for the entire industry, a positive double-digit growth of 19% in the upcoming year , and an enormous growth of 33% over the next couple of years. However this rate still came in below the growth rate of the Indian stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Time Technoplast is a laggard or leader relative to its basic materials sector peers.
View our latest analysis for Time Technoplast
What’s the catalyst for Time Technoplast’s sector growth?
The sector seems to be mature in terms of its industry life cycle, with highly competitive companies and inevitable consolidation. In the past year, the industry delivered growth in the teens, though still underperforming the wider Indian stock market. Time Technoplast leads the pack with its impressive earnings growth of 24% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Time Technoplast poised to deliver a 27% growth over the next couple of years compared to the industry’s 19%. This growth may make Time Technoplast a more expensive stock relative to its peers.
Is Time Technoplast and the sector relatively cheap?
The packaging industry is trading at a PE ratio of 14.27x, relatively similar to the rest of the Indian stock market PE of 17.55x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 9.8% on equities compared to the market’s 9.5%. On the stock-level, Time Technoplast is trading at a PE ratio of 15.16x, which is relatively in-line with the average packaging stock. In terms of returns, Time Technoplast generated 13% in the past year, which is 2.9% over the packaging sector.
Next Steps:
Time Technoplast’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Time Technoplast has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Time Technoplast’s fundamentals in order to build a holistic investment thesis.