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Sintex is a diversified play on the booming mass housing construction industry, the rising social infrastructure
spent, and the buoyancy in automobiles, electricals and textiles.
It derives 42% of its revenue from the building material segment (which includes monolithic construction and
prefabricated structure). The demand for the same is growing at a robust pace with mass housing initiatives
and the government’s drive towards building up social infrastructure. It is also a top composite-moulding
player with a dedicated clientele and has over the years acquired technical expertise through overseas
acquisitions.
Sintex reported a strong set of results for Q4FY11 (+34% Y-o-Y revenue growth). The over 30% revenue growth
has now been seen for the last five quarters while the margin profile has also improved considerably and the
future environment continues to look strong on account of a strong order built-up, with synergies on the
foreign subsidiaries getting reflected into the margins
On the back of stupendous order execution, the revenue growth in the monolithic division (+50% YoY), the
increase in the order book position to Rs2,900 crore (about 2.4x FY11 revenue) executable over 18-20 months
gives us comfort with regard to the revenue visibility and the execution capability of the company. Further,
the revenue growth and the margin expansion being witnessed in the custom molding division, the improvement
in the working capital cycle and the addresal of the investor concerns by pulling out of the capital-intensive
oil and gas investment provide us with fundamental comfort with regard to the business.
The attractive valuation (at 8.6x FY13 earnings) keeps us bullish on the company. We maintain our Buy rating
with a price target of Rs233. At our target price, the stock would be trading at 11x its FY13 fully diluted EPS
of Rs21.1.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sintex is a diversified play on the booming mass housing construction industry, the rising social infrastructure
spent, and the buoyancy in automobiles, electricals and textiles.
It derives 42% of its revenue from the building material segment (which includes monolithic construction and
prefabricated structure). The demand for the same is growing at a robust pace with mass housing initiatives
and the government’s drive towards building up social infrastructure. It is also a top composite-moulding
player with a dedicated clientele and has over the years acquired technical expertise through overseas
acquisitions.
Sintex reported a strong set of results for Q4FY11 (+34% Y-o-Y revenue growth). The over 30% revenue growth
has now been seen for the last five quarters while the margin profile has also improved considerably and the
future environment continues to look strong on account of a strong order built-up, with synergies on the
foreign subsidiaries getting reflected into the margins
On the back of stupendous order execution, the revenue growth in the monolithic division (+50% YoY), the
increase in the order book position to Rs2,900 crore (about 2.4x FY11 revenue) executable over 18-20 months
gives us comfort with regard to the revenue visibility and the execution capability of the company. Further,
the revenue growth and the margin expansion being witnessed in the custom molding division, the improvement
in the working capital cycle and the addresal of the investor concerns by pulling out of the capital-intensive
oil and gas investment provide us with fundamental comfort with regard to the business.
The attractive valuation (at 8.6x FY13 earnings) keeps us bullish on the company. We maintain our Buy rating
with a price target of Rs233. At our target price, the stock would be trading at 11x its FY13 fully diluted EPS
of Rs21.1.
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