Stay away from counter
TimeTechnoplast is a Mumbaibased company engaged in
manufacturing and selling of moulded drums used for industrial packaging, entrance matting and anti- spray flaps. We had recommended selling this scrip at Rs 734 in our issue dated 3 Aug, 2008. Our logic was that a company like Time Technoplast cannot command such high market cap to sales (of 2 times) and looking at its business verticals and growth, the correct price would be Rs 675. Now, the company is trading at Rs 639.55. Since the company is now trading at a price we had recommended to our readers for entering the counter, should the readers enter it now? We do not think it is the right time to enter the scrip. Though the company is good and has a major market share in industrial packaging and has posted good numbers in the latest quarterly results, some other issues are not in cornpany’s favour. The company commands more than 70 per cent of market share in polymer drums and 93 per cent in anti- spray flaps (ASF) for trucks. The company has shown good results for Q1FYO9 and has posted topline of Rs 215.91 crore for Qi FY09 on consolidated basis, as against Rs 121.5 crores in Q1FYO8, up by 78 per cent. The company recorded bottomline of Rs 19.52 (Q1FYO9) crore against Rs 11.48 crore in Qi FY08, showing an increase of 70 per cent. It has even improved its EBITDA margin by 100 basis points. But when we see the number of trades in the counter, the figure is very low, with two week BSE average of just 414. Low volumes on any counter always pose problem of liquidity and if an investor wishes to exit it, he may not get the right price to exit. Moreover, the number of shareholders has also not gone up from last quarter and remained at around 5,000. Therefore, we recommend our readers to stay away from the counter.
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