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Sintex Industries (SNTX.BO) Rs173.15
Estimates Under Review Equity Research
First Take: 4QFY11 above expectations; reiterate Buy
News
Sintex announced 4QFY11 sales of Rs14.64bn - up 34% yoy, continuing the
trend of +30% growth seen over the last four consecutive quarters. This,
coupled with a 350 bp yoy increase in EBITDA margin led to Net Income
of Rs1682mn, c.16% above our and Bloomberg consensus estimates.
The monolithic order book at the end of FY11 stood at about Rs30 bn,
equating to 22-24 months of sales. Sintex has guided for strong growth in
FY12, in the 25-30% range, across most of its segments, except the textiles
segment which saw exceptionally strong growth in FY11. The company
expects to maintain/improve upon its FY11 margins over the next 12
months.
Analysis
While the monolithic business (ex-infrastructure revenues of Rs840mn)
was up by 28% yoy over a strong 4QFY10 base – the social spending driven
prefabs segment (+39% yoy) and the custom molding segments (+27%
yoy) saw stronger than we expected revenue growth. Improving operating
performance at the overseas custom molding subsidiaries led to a c.300 bp
improvement in EBITDA margins in FY11 vs FY10 levels.
Increasing working capital requirements has been one of the key concerns
for Sintex over the last 4-5 quarters. Given this, the reduction in cash
conversion cycle to about 115 days as of FY11 end, versus 133 days in
FY10, was a key positive takeaway from this quarter’s results, in our view.
Though working capital will likely continue to remain higher than historical
lows with larger contribution from the monolithic and infrastructure
segments, we believe the improvement seen this quarter indicates that
Sintex is on track to reduce this to more efficient levels.
Implications
We reiterate our Buy rating on the stock, but place our estimates and
target price under review, pending further discussion with management.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Coverage View: Neutral
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sintex Industries (SNTX.BO) Rs173.15
Estimates Under Review Equity Research
First Take: 4QFY11 above expectations; reiterate Buy
News
Sintex announced 4QFY11 sales of Rs14.64bn - up 34% yoy, continuing the
trend of +30% growth seen over the last four consecutive quarters. This,
coupled with a 350 bp yoy increase in EBITDA margin led to Net Income
of Rs1682mn, c.16% above our and Bloomberg consensus estimates.
The monolithic order book at the end of FY11 stood at about Rs30 bn,
equating to 22-24 months of sales. Sintex has guided for strong growth in
FY12, in the 25-30% range, across most of its segments, except the textiles
segment which saw exceptionally strong growth in FY11. The company
expects to maintain/improve upon its FY11 margins over the next 12
months.
Analysis
While the monolithic business (ex-infrastructure revenues of Rs840mn)
was up by 28% yoy over a strong 4QFY10 base – the social spending driven
prefabs segment (+39% yoy) and the custom molding segments (+27%
yoy) saw stronger than we expected revenue growth. Improving operating
performance at the overseas custom molding subsidiaries led to a c.300 bp
improvement in EBITDA margins in FY11 vs FY10 levels.
Increasing working capital requirements has been one of the key concerns
for Sintex over the last 4-5 quarters. Given this, the reduction in cash
conversion cycle to about 115 days as of FY11 end, versus 133 days in
FY10, was a key positive takeaway from this quarter’s results, in our view.
Though working capital will likely continue to remain higher than historical
lows with larger contribution from the monolithic and infrastructure
segments, we believe the improvement seen this quarter indicates that
Sintex is on track to reduce this to more efficient levels.
Implications
We reiterate our Buy rating on the stock, but place our estimates and
target price under review, pending further discussion with management.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
Coverage View: Neutral
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