Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Sintex Industries
I mproved fundamentals
Beneficiary of non-cyclical social spending; custom moulding well positioned
Sintex Industries (SINT), a diversified industrial company, is a key beneficiary of
the government’s non-cyclical and growing social spending on education, low-cost
housing, healthcare and rural infrastructure in India. Its building products business
(50% of FY11 EBITDA) has scale advantages and its custom moulding business
(35% of FY11 EBITDA) looks well positioned to benefit from a recovery in the
industrial cycle, and synergies from its acquisitions and their scaling up.
Balance sheet improvement; divestment of unrelated investment a positive
We think concerns over SINT’s capital discipline have been largely allayed by
sharply lower working capital in FY11, divestment of unrelated investments (oil
and gas), and management’s focus on the core business. Strong revenue growth
and the EBITDA margin in FY11 reflect execution capability. A growing
monolithic construction order book (22 months revenue of Rs29bn) provides
growth and margin visibility in the near term.
We forecast a 19.8% EPS CAGR for FY11-13; attractive valuation
We believe SINT’s valuation—FY12E PE of 8.5x and EV/EBITDA of 6.4x—is
attractive, and forecast an EPS CAGR of 19.8% for FY11-13 and ROE of 21.1%
for FY12. We think an improving growth trajectory, a stronger balance sheet
(lower working capital, debt:equity at 0.3x in FY13E) and positive free cash flow
from FY11E should support to a re-rating of the stock.
Valuation: initiate coverage with a Buy rating and price target of Rs240.00
We base our price target for SINT on a sum-of-the-parts methodology because of
the diversified nature of its business. Our price target implies an FY13E PE of
11.2x and EV/EBITDA of 6.9x.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Sintex Industries
I mproved fundamentals
Beneficiary of non-cyclical social spending; custom moulding well positioned
Sintex Industries (SINT), a diversified industrial company, is a key beneficiary of
the government’s non-cyclical and growing social spending on education, low-cost
housing, healthcare and rural infrastructure in India. Its building products business
(50% of FY11 EBITDA) has scale advantages and its custom moulding business
(35% of FY11 EBITDA) looks well positioned to benefit from a recovery in the
industrial cycle, and synergies from its acquisitions and their scaling up.
Balance sheet improvement; divestment of unrelated investment a positive
We think concerns over SINT’s capital discipline have been largely allayed by
sharply lower working capital in FY11, divestment of unrelated investments (oil
and gas), and management’s focus on the core business. Strong revenue growth
and the EBITDA margin in FY11 reflect execution capability. A growing
monolithic construction order book (22 months revenue of Rs29bn) provides
growth and margin visibility in the near term.
We forecast a 19.8% EPS CAGR for FY11-13; attractive valuation
We believe SINT’s valuation—FY12E PE of 8.5x and EV/EBITDA of 6.4x—is
attractive, and forecast an EPS CAGR of 19.8% for FY11-13 and ROE of 21.1%
for FY12. We think an improving growth trajectory, a stronger balance sheet
(lower working capital, debt:equity at 0.3x in FY13E) and positive free cash flow
from FY11E should support to a re-rating of the stock.
Valuation: initiate coverage with a Buy rating and price target of Rs240.00
We base our price target for SINT on a sum-of-the-parts methodology because of
the diversified nature of its business. Our price target implies an FY13E PE of
11.2x and EV/EBITDA of 6.9x.
No comments:
Post a Comment