Small-cap stock Time Technoplast jumps 9%, surges over 40% in last 1 month; Motilal Oswal sees another 40% upside

Small-cap stock Time Technoplast has gained over 40 per cent in the past month, and according to brokerage firm Motilal Oswal Financial Services, it may have more upside potential. Time Technoplast share price opened at ₹420.05 against its previous close of ₹410.40 and jumped 8.8 per cent to hit an intraday high of ₹446.45, looking set to extend gains to the third consecutive session.

Time Technoplast share price has gained over 40 per cent in the last one month. However, year-to-date, the small-cap stock has declined over 11 per cent. It hit a 52-week high of ₹513.35 on December 13 and a 52-week low of ₹274.15 on June 7 last year.

Motilal Oswal expects further upside

Brokerage firm Motilal Oswal Financial Services believes the stock has more upside potential due to the company's strong growth prospects, improving return ratios and attractive valuation.

Motilal has initiated coverage on the stock with a buy rating and a target price of ₹578, implying a 41 per cent upside potential.

"We initiate coverage on Time Technoplast with a buy rating and a target price of ₹578 (41 per cent upside potential), based on 22 times FY27E PE (close to sector average). Our positive stance is backed by the company’s strong growth prospects, improving return ratios and attractive valuation (nearly 16 times FY27E PE)," said Motilal Oswal.

Motilal Oswal expects a CAGR of 15 per cent, 16 per cent and 23 per cent in revenue, EBITDA and PAT, respectively, over FY25-28E, led by strong performance in its value-added product (VAP) segment and strong cash flow generation.

Motilal Oswal said asset monetisation, business restructuring, and cost reduction measures will improve operational efficiency and strengthen the company's balance sheet.

Despite annual capex of nearly ₹170 crore, Motilal estimates pre-tax RoCE (return on capital employed) and RoIC (return on invested capital) to expand from nearly 18 per cent each in FY25 to nearly 23 per cent and 26 per cent, respectively, in FY28 on healthy operating performance, improved plant efficiency and tightening of net working capital cycle by 10-15 days.

Moreover, the brokerage firm believes that the company will use an estimated annual FCF (free cash flow) of over ₹400 crore to pare debt and achieve net cash status in FY27E against net debt of ₹590 crore and 470 crore in FY24 and FY25, respectively.

"We estimate healthy OCF/EBITDA (nearly 60%+) and FCF/PAT (80%+) over the next three years," said Motilal Oswal.

Should you buy the stock now?

Technical experts say that investors can consider buying the stock on pullbacks as the bullish structure remains intact.

Anshul Jain, Head of Research at Lakshmishree Investments, pointed out that Time Technoplast stock has broken out of a bullish 29-day-long cup and handle pattern at ₹380, with above-average volumes confirming the breakout strength.

"The breakout sets an immediate target near ₹500. However, the stock is currently stretched on both daily and hourly charts. Traders should look to enter fresh longs on pullbacks for better risk-reward entries, as the bullish structure remains intact and further upside is likely post minor consolidation or retracement," said Jain.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.