Strong quarter as expected
Sintex reported a strong Q2 as expected. Revenue was up 29%yoy led by
monolithic and prefab. EBITDA up 34%yoy was led by 60bps margin expansion.
Adjusted PAT was up 43%yoy, beating estimates by 7%, led by lower interest
costs and taxes. Reiterate Buy with unchanged PO of INR500. Our PO is at a
12.5x 1yr fwd PE & 0.5x PEG, in line with the rest of the mid-cap coverage.
Monolithic growth drives revenue; exploring acquisitions
Monolithic segment doubled in revenue yoy. The company has started executing
monolithic orders in a standalone company as well as in a 100% owned
subsidiary ‘Sintex Infrastructure’ to benefit from tax breaks. Revenue booked on a
100% completion basis in the standalone company jumped 57% yoy. Sintex is
also exploring acquisitions in monolithic so as to expand reach in North India.
Rest of the segment grow strongly too
The rest of the segments posted robust growth too. Prefab grew 23%yoy while
custom molding grew 30%yoy on consolidated basis- mainly led by Bright
Autoplast. While textile grew 4% yoy, margin jumped to ~25% (+600bps yoy). We
expect growth in prefabs and custom molding to drive growth ahead.
Valuations remain attractive; reiterate Buy
Sintex trades at a 11xFY12e PE for a 27% EPS CAGR. These are attractive
valuations given i) revenue visibility as well as strong demand environment and
ii)expected de-leveraging given positive free cash flows. We reiterate our Buy.
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