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Research
Sintex Industries - Result Update - Dolat Capital
Posted On : 2012-05-15 21:51:53( TIMEZONE : IST )
Sintex Industries Q4FY12 Results: Fundamentals continue to decelerate with strong headwinds
- Q4FY12 Revenues fall 30% YoY on slowdown woes: Slowdown in the monolithic segment (on account of political logjam and execution issues) & custom moulding segment (particularly led by the overseas subsidiaries) resulted Sintex reporting 30% YoY fall in revenues much below estimates at Rs.10.2bn in Q4FY12 as compared to Rs.14.6bn in Q4FY11. For the full year revenues were down 1% to Rs.44.3bn mainly led by monolithic segment which declined 19% YoY to Rs 10.9bn.
- EBIDTA margins witness sharp contraction: Slower execution of monolithic projects & slowdown in the custom mouldings segment resulted in severe contraction of operating margins to 15.8% in Q4FY12 from 20% in Q4FY11. However on back of better margins in Prefabs and Textile division, overall margins were better than our estimates (Dolat estimates @14.7%). For the full year, margins contracted by 200bps to 16.2%.
- PAT plunges 46% on decline in revenues & margins: Q4FY12 PAT declined 46% to Rs.912mn as compared to Rs.1.68bn recorded in Q4FY11 on account of poor operational performance. PAT for FY12 too declined 33% YoY to Rs.3.07bn. Adjusted PAT (adjusted for MTM forex loss) however declined by 22% to Rs.3.54bn.
Financial Outlook
We believe that Sintex would continue to face strong headwinds in its building product (read monolithic construction) as well as custom moulding segment (read overseas subsidiaries) over the next couple of quarters which could result in a moderate revenue growth for the company in FY13. We expect the revenues to grow at a two year CAGR of 11% from FY12-FY14 (Last 5 year CAGR of more than 30%)
Valuation & Recommendation
Sintex currently trades at 5.2x & 4.7x its FY12 & FY13E earnings of Rs.11.2 & Rs.12.6 respectively. With company facing strong headwinds with respect to its key segments, we continue to maintain our cautious stance on the company despite recent stock correction on the bourses. Apart from the operational headwinds, FCCB redemption (due in Q4FY13) would continue to remain an overhang on the stock. We maintain a "Accumulate" rating on the stock with a price target of Rs.63, reflecting an upside of 7% from the current levels.
