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4QFY11 results
Sintex reported strong results for 4QFY11 with sales +35% YoY and net
profit +21% YoY. The company also reported a healthy reduction in
working capital days (from 152 TO 102), resulting in positive free cash
flow for the year despite higher than expected capex. Business
momentum remains strong with the monolithic order book at Rs29bn and
the traction in other businesses is strong. We upgrade earnings by 4-5%
for FY12-13. Given the 22% earnings CAGR over FY11-13, positive FCF
and 8.5x FY12PE, rerating potential for Sintex remains high. Retain BUY.
4QFY11: strong results
Sintex reported results for 4QFY11 over the weekend. Revenue growth was a
healthy 35%, with the building products business growing at a healthy 45%
YoY while composites grew at 27% YoY. Ebitda margins expanded 421bps YoY
to 21.1%. However, this was offset by lower other income and a higher tax
rate, pulling back net profit growth to 21%, albeit on a strong base from 4Q
last year. QoQ net profit growth was 47% as March is seasonally strong.
Business momentum strong
The overall business momentum remains strong. The order book in the
monolithic business stood at Rs29bn (Rs26bn in December). The prefab
business continues to gain traction and is planning to enter some new states,
including Bihar and Maharashtra. In custom mouldings, the company
continues to leverage synergies from the subsidiaries and move business to
India. Whilst revenue growth in textiles is expected to moderate in FY12, the
company does anticipate margin improvements.
FCF positive despite higher capex, working capital improves
Sintex saw net working capital days (ex-cash) decline from 152 in FY10 to
102 in FY11, performing better than expected. Whilst capex for the year was
higher than expected, the strong working capital performance and operating
performance ensured positive FCF for the year. Going forward, the company
expects minor improvements in working capital and capex of Rs3-4 bn/year,
which should allow the FCF +ve performance to continue.
Upgrade forecasts
Given the stronger than expected operating performance, we have upgraded
our forecasts by 4-5% for FY12-13. We like Sintex due to its strong growth
drivers in India’s social infrastructure spend, synergy driven opportunities in
the composites business and healthy earnings growth alongside positive FCF.
Maintain BUY with a SOTP based price target of Rs200, 16% upside.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
4QFY11 results
Sintex reported strong results for 4QFY11 with sales +35% YoY and net
profit +21% YoY. The company also reported a healthy reduction in
working capital days (from 152 TO 102), resulting in positive free cash
flow for the year despite higher than expected capex. Business
momentum remains strong with the monolithic order book at Rs29bn and
the traction in other businesses is strong. We upgrade earnings by 4-5%
for FY12-13. Given the 22% earnings CAGR over FY11-13, positive FCF
and 8.5x FY12PE, rerating potential for Sintex remains high. Retain BUY.
4QFY11: strong results
Sintex reported results for 4QFY11 over the weekend. Revenue growth was a
healthy 35%, with the building products business growing at a healthy 45%
YoY while composites grew at 27% YoY. Ebitda margins expanded 421bps YoY
to 21.1%. However, this was offset by lower other income and a higher tax
rate, pulling back net profit growth to 21%, albeit on a strong base from 4Q
last year. QoQ net profit growth was 47% as March is seasonally strong.
Business momentum strong
The overall business momentum remains strong. The order book in the
monolithic business stood at Rs29bn (Rs26bn in December). The prefab
business continues to gain traction and is planning to enter some new states,
including Bihar and Maharashtra. In custom mouldings, the company
continues to leverage synergies from the subsidiaries and move business to
India. Whilst revenue growth in textiles is expected to moderate in FY12, the
company does anticipate margin improvements.
FCF positive despite higher capex, working capital improves
Sintex saw net working capital days (ex-cash) decline from 152 in FY10 to
102 in FY11, performing better than expected. Whilst capex for the year was
higher than expected, the strong working capital performance and operating
performance ensured positive FCF for the year. Going forward, the company
expects minor improvements in working capital and capex of Rs3-4 bn/year,
which should allow the FCF +ve performance to continue.
Upgrade forecasts
Given the stronger than expected operating performance, we have upgraded
our forecasts by 4-5% for FY12-13. We like Sintex due to its strong growth
drivers in India’s social infrastructure spend, synergy driven opportunities in
the composites business and healthy earnings growth alongside positive FCF.
Maintain BUY with a SOTP based price target of Rs200, 16% upside.
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