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Research
Sintex Industries - Topline beats, margins in line - BUY - Religare
Posted On : 2013-01-14 09:10:19( TIMEZONE : IST )
SINT reported strong 23%/32%/ 44% topline/EBITDA/adj. PAT growth for Q3FY13 led by healthy performance across segments. EBITDA margin came in line at 15% (first uptick YoY in past six quarters), while PAT was ahead at Rs 987mn on the topline beat. We believe developments over the past quarter reflect the company's intent towards improving its B/S and re-gaining investor confidence. We raise our estimates on higher topline and margin expectations and accordingly our TP to Rs 105 (Rs 95 earlier). BUY.
- Topline growth surprises - up 22.6% YoY: SINT's topline at Rs 11.8bn topped estimates as the Monolithic (ML) /Prefab segments grew higher than expected at 40% (on booking of extra orders)/22.5% YoY. The Custom Moulding segment clocked 22% YoY growth led by 27.5%/15% growth in international/ domestic business. The ML segment order book stands at Rs 23bn and the company has cut slow-moving sites to 4 from 5 QoQ. SINT continues to choose new projects prudently and aims to cut working capital by Rs 1.5bn by Q4FY13.
- Margins in line; expand 112bps YoY/ 63bps QoQ: EBITDA margins came in line at 15%, higher YoY for the first time in six quarters. SINT reported forex losses of Rs 450mn. Excluding this, adj. PAT stood at Rs 987mn, up 44% YoY. There would be no FCCB forex losses/gains from Q4 as the new FCCBs would be fully hedged.
- Estimates upgraded; BUY on improving sentiments: We believe the recent developments indicate SINT's intent towards addressing concerns on unlocking working capital and improving its B/S. Fresh capital infusion via the QIP, warrants issue to promoters and FCCB refinancing would help pay-off some debt and address concerns on ROCE/FCFF. We see overhangs on the stock abating as management tries to re-gains investor confidence. We upgrade our FY13/14/15 PAT estimates by 11.8%/8.7%/9.8% on higher topline and margin expectations and accordingly our Sep'13 TP to Rs 105 based on 7.5x one-year forward earnings (earlier Rs 95). BUY.
