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Research
Sintex Industries - Key segments pull down growth further - Karvy
Posted On : 2012-07-21 21:06:16( TIMEZONE : IST )
- Sales, EBITDA and PAT de-grew by 3%, 6% and 51% YoY respectively
Sales of Monolithic and Custom Molding International segments degrew by 22% and 17% YoY respectively
De-growth continues in Monolithic: The revenues from Monolithic biz degrew 22% in Q1FY13 vs Q1FY12 due to bureaucratic delays, clearance procrastinations by the government, delays in payments and site handovers. Sintex Industries' Management does not believe that the environment will change for the next two quarters. However, EBITDA margin for the segment increased to 19.3% in Q1FY13 against 18.4% in Q1FY12.
De-Growth in Custom Molding International: Nief has experienced top-line de-growth by 17% YoY to Rs. 2,460mn due to global macro-economic issues and lack of demand from auto and electric OEMs. Wausaukee also had the same fate with a decline of revenue by 14% YoY. The segment's EBITDA margin has compressed by 330bps to 10.2% in Q1FY13.
Growth Momentum continues in Prefab and Custom Molding India: Prefab business unit has grown by 16% and 20% YoY in sales and EBITDA respectively in Q1FY13. Bright business unit grew by 35% and 28% YoY in sales and EBITDA respectively in Q1FY13. Custom Molding India business has grown by 15% and 9% YoY in sales and EBITDA respectively in Q1FY13. We believe Prefab and Custom Molding India businesses will grow high teens in the next two years as there is a good demand from various government institutions, auto and electric sectors.
Forex losses drag down net income: Sintex reported Rs. 289mn in foreign exchange MTM losses on FCCBs, which resulted in de-growth of net income by 51% YoY to Rs. 469mn.
Outlook & Valuation: We believe Monolithic and custom molding international business will de-grow in single digits and the remaining business units such as Prefab, Custom Molding India and Textiles will grow double digits. We believe that the Company will register 4% and 14% growth in revenue in FY13E and FY14E respectively. We also believe the net income will grow by -9% and 29% in FY13E and FY14E respectively. At CMP of Rs. 65, the stock trades at 6.4x and 5.0x of FY13E and FY14E earnings respectively. We maintain our 'SELL' recommendation and revised out target price down to Rs. 59 per share, which represents a downside potential of 9%.
