Maintain 'buy' on Sintex Industries – TP lowered to Rs.97 - Geojit BNP Paribas Financial Services

- Buy rating on Sintex Industries is maintained with a lower target price of Rs.97 as against the earlier target price of Rs.103. Target price is lowered to factor in the slowdown in the monolithic division.

- The company reported 1QFY13 revenue of Rs.1080 crore, which is 4% down yoy and 5% up qoq. Revenue was lower than market estimates.

- However, EBITDA margin is higher at 16.8% as against the market estimates of 15.3%.

- The company has recognized a notional currency loss of Rs.28.8 crore and consequently impacted 37%.

- Net debt of the company remained at 4QFY12 level of Rs.2500 crore.

- Monolithic business generated revenue of Rs.220 crore, 22% lower yoy. Management expects the monolithic business will stay muted for the next two quarters.

- Company believes the prefab and Indian custom molding businesses will be the major growth drivers going ahead.

- Management expects a sharp decline in capex to Rs.150 crore in FY13 from Rs.500 crore in FY12.

- It seems that the current price factors in the key concerns like slower execution at monolithic, contraction in EBITDA margin and FCCB conversion at the current rupee/ dollar rate.

- Prolonged global economic slowdown and continued slowdown in monolithic execution are key risks to the target price.

Source : Equity Bulls

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