Sintex Industries - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Sintex reported a 2.8% yoy decline in its net sales to Rs.1,081cr. The company's EBITDA declined by 6.1% yoy to Rs.178cr and its EBITDA margin contracted by mere 58bp yoy to 16.4%. PAT came in at Rs.47cr, down 49% yoy largely due to forex loss of Rs.29cr during the quarter. We maintain our Buy recommendation on the stock.

Lower monolithic segment's revenue and forex loss impacts earnings: Sintex's consolidated net sales declined by 2.8% yoy but improved by 5.6% qoq to Rs.1,081cr during 1QFY2013. The decline in revenue on a yoy basis was mainly led by the monolithic segment, which reported a dip of 22.4% yoy to Rs.215cr; but performance by the storage tanks segment improved significantly by 35.2% yoy to Rs.64cr. The domestic custom moulding segment continued its strong performance reporting 25.1% yoy growth to Rs.224cr, while the overseas custom moulding reported a 16.1% yoy decline in revenue to Rs.292cr. Sintex's 1QFY2013 consolidated EBITDA stood at Rs.178cr, down 6.1% yoy but improved 11.0% qoq. OPM for the quarter stood at 16.4%, down 58bp yoy (up 81bp qoq). During the quarter, Sintex booked other income of Rs.4cr (down 63.9% yoy) and also reported forex loss of Rs.29 during the quarter. Consequently, PAT came in at Rs.47cr, down 48.7% yoy. But Adjusted for forex loss PAT came in at Rs.76cr down 20.0% yoy.

Outlook and valuation: Sintex is currently trading at attractive valuation 4.2x FY2014E EPS and 0.6x FY2014E P/BV only, post factoring most of the negatives in our estimates. Over the last five years, Sintex has traded at an average one-year P/E of 11.1x, which makes current valuations attractive. Moreover, further integration of foreign subsidiaries and up-tick 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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