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Sintex Industries Ltd
Margin improvement
continues; high visibility
In line quarter; reiterate Buy for ~40% upside potential
Sintex reported an in line quarter with 22% revenue growth. PAT at INR946mn
was up 20% yoy and was in line. Margins improved 200bps, ahead of BofAML led
by better mix as well as across the board improvement. Post the quarter we retain
our estimates and reiterate Buy with target of INR250 for ~40% upside potential.
High margin segments drive margin jump
Sintex margins improved for the fifth consecutive quarter as more profitable
monolithic, prefab and textile increased contribution. In Q1FY12 monolithic
segment posted a strong 57% yoy revenue growth along with margin
improvement of 100bps due economies of scale. Custom Molding consolidated
margins improved 230bps led by i) savings on rentals in Nief post the purchase of
facilities in Q4FY11 and ii) better mix.
Visibility high; Monolithic order book jumps 30% yoy
Despite strong execution in Monolithic, order book jumped 30% yoy to INR30bn.
Moreover given i) sustained orders from domestic/ outsourcing clients and
ii) pending ramp up in Schneider/ Areva accounts visibility is high in Custom
Molding. We expect Prefabs to post over 20% growth pending scale up in new
states like Uttar Pradesh and Bihar.
Valuations remain attractive; Reiterate Buy
Sintex currently trades at 8.6xFY12e and 7.2xFY13e PE for ~20% EPS CAGR.
We think these are attractive valuations given i) strong revenue visibility and
ii) expected de-leveraging. PO is at 10xFY13e PE implying a PEG of 0.5x- in line
with a 2yr PEG range of 0.4 to 0.6x for our mid cap coverage. Reiterate Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sintex Industries Ltd
Margin improvement
continues; high visibility
In line quarter; reiterate Buy for ~40% upside potential
Sintex reported an in line quarter with 22% revenue growth. PAT at INR946mn
was up 20% yoy and was in line. Margins improved 200bps, ahead of BofAML led
by better mix as well as across the board improvement. Post the quarter we retain
our estimates and reiterate Buy with target of INR250 for ~40% upside potential.
High margin segments drive margin jump
Sintex margins improved for the fifth consecutive quarter as more profitable
monolithic, prefab and textile increased contribution. In Q1FY12 monolithic
segment posted a strong 57% yoy revenue growth along with margin
improvement of 100bps due economies of scale. Custom Molding consolidated
margins improved 230bps led by i) savings on rentals in Nief post the purchase of
facilities in Q4FY11 and ii) better mix.
Visibility high; Monolithic order book jumps 30% yoy
Despite strong execution in Monolithic, order book jumped 30% yoy to INR30bn.
Moreover given i) sustained orders from domestic/ outsourcing clients and
ii) pending ramp up in Schneider/ Areva accounts visibility is high in Custom
Molding. We expect Prefabs to post over 20% growth pending scale up in new
states like Uttar Pradesh and Bihar.
Valuations remain attractive; Reiterate Buy
Sintex currently trades at 8.6xFY12e and 7.2xFY13e PE for ~20% EPS CAGR.
We think these are attractive valuations given i) strong revenue visibility and
ii) expected de-leveraging. PO is at 10xFY13e PE implying a PEG of 0.5x- in line
with a 2yr PEG range of 0.4 to 0.6x for our mid cap coverage. Reiterate Buy.
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