Sintex Industries - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Sintex reported a 30.1% yoy decline in its net sales to Rs.1,024cr. The company's EBITDA declined by 45% yoy to Rs.160cr and its EBITDA margin contracted by 415bp yoy to 15.6%. PAT came in at Rs.91cr, down 46% yoy. We maintain our Buy recommendation on the stock.

Lower monolithic segment's revenue impacts earnings: Sintex's consolidated net sales declined by 30.1% yoy to Rs.1,024cr during 4QFY2012, lower than our expectation. The decline in revenue was mainly led by the monolithic segment, which reported a dip of 54% yoy to Rs.264cr; and flat performance by the storage tanks segment at Rs.59cr. The domestic custom moulding segment reported 22% yoy growth to Rs.266cr, while the overseas custom moulding reported a 71% yoy decline in revenue to Rs.91cr. Sintex's 4QFY2012 consolidated EBITDA stood at Rs.160cr, down 45% yoy. OPM for the quarter stood at 15.6%, down 415bp yoy (up 158bp qoq) on the back of margin expansion in all segments. During the quarter, Sintex booked other income of Rs.12cr (up 35% yoy). Consequently, PAT came in at Rs.91cr, down 46% yoy, significantly below expectation.

Outlook and valuation: We have downgraded our earnings estimates for FY2013E and FY2014E on account of slowdown in the monolithic segment. Sintex will have low net debt/equity of 0.7x, by FY2014E. The stock is currently trading at 3.3x FY2014E EPS and 0.4x FY2014E P/BV only, which we feel is very attractive. Over the last five years, Sintex has traded at an average one-year P/E of 11.4x, which makes current valuations attractive. Moreover, further integration of foreign subsidiaries and acquisition in the monolithic segment will act as key catalysts for the stock. We maintain our Buy recommendation on the stock with a target price of Rs.79.

Source : Equity Bulls

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