Maintain Buy on Sintex Industries - Q3FY12 Result Review - PINC Research

Q3FY12 Result Review – Sintex Industries

Monolithic, custom moulding a drag; Focus on B/S lightening

Sintex Industries (SINT) reported a marginal revenue de-growth of 2% YoY to Rs11.6bn and EBITDA margin of 14.1% (PINCe 14.3%) which is in line with our estimate. Reported PAT fell 27%YoY to Rs822mn which includes forex gain of Rs135mn due to new AS11 amendment. Adjusting for this forex gain, adjusted PAT is in line with our estimate at Rs687mn. SINT's stock price correction (39% over past 3 months) has already factored in the slowdown as discussed in our note released on 9thJan'12. Going forward we expect 1) monolithic business to revive post Q1FY13 (post election) and show better order intake, execution, and collection of payment, (2) prefab business to show new activity and faster collection starting H1FY13, (3) domestic custom moulding (CM) to start delivering better results as we see things to improve here onwards in electrical, auto and other divisions. However, overseas custom moulding will be hard hit due to European and US economic slowdown (4) focus on balance sheet lightening and improving FCF. We maintain our 'BUY' recommendation with TP of Rs115.

- Revenue de-grew by 2% YoY
- Margins fell 253bps YoY
- FCCB currency losses routed through balance sheet

VALUATIONS & RECOMMENDATION

At CMP of Rs72, the stock discounts FY12e & FY13e EPS of Rs14.0 & Rs16.2 by 5.1x and 4.5x respectively. We maintain our 'BUY' recommendation with TP of Rs115.

The Sintex Industries stock closed the day at Rs.71.80, up by Rs.1.85 or 2.64%. The stock hit an intraday high of Rs.72.60 and low of Rs.70.30.

The total traded quantity was 10.72 lakhs compared to 2 week average of 12.62 lakhs.

Source : Equity Bulls

Keywords