Sintex Industries Ltd |
Upgrade Earnings; Maintain Hold |
HOLD
CMP: Rs 423 Target Price: Rs 430
n Better margins (monolithic – 23%, custom moldings – 27% and prefabs - 25%) across standalone businesses in Q2FY11 – part of it unsustainable, to normalize in full year numbers
n Increasing working capital (~ 135days, assuming Rs4bn of loans & adv. as cash, otherwise 170 days) is a function of monolithic mix increasing, its likely to be a permanent trend
n Upgrade EPS by 12-14% in FY11E/12E. Negative FCF in core business; yet plans to invest in oil & gas & power, also looking at acquisition. Cash flows to remain under pressure
n Trading at 10.5xFY12E earnings (Rs40.2/Share), the earnings growth in FY10-FY12E – 29% is lower than past 7 year’s growth at 33%, however valuations similar, maintain hold
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