Sintex Industries -Growth momentum to continue… :: ICICI Securities, report

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Buy Sintex :: ICICI Securities

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Sintex Industries: Higher-than-anticipated capex implies depressed ROCE, could delay any re-rating of the name :: Nomura

Downgrade to Neutral, TP scaled back to INR39
We downgrade Sintex to Neutral, as we scale back average FY14-15F
EBITDA by ~16% and cut our target EV/EBITDA to 4.0x (vs 4.8x earlier).
We believe that incremental capex (partly related to the spindle project)
will lead to a 260bp y-y decline in FY14F pre-tax ROCE (vs our earlier
anticipated increase) and delay any re-rating of the stock. Current
valuation at FY14F EV/EBITDA of 4.9x is in line with the past one-year
average trading multiple of 4.8x

Sintex Industries Ltd:: IFCI research

Clouds beginning to clear!
We believe Sintex Industries Ltd (SIL) is all set for re-rating from current levels as the short term issue of repayment of Foreign Currency Convertible Bonds (FCCB) has been resolved. From the long term perspective, we believe there is a concerted effort on the part of the management to focus on balance sheet strength and quality of earnings. We therefore initiate coverage on SIL with a BUY rating and TP of Rs91 per share.  Short term concern of FCCB repayment issue resolved: SIL is required to repay US$292mn by Mar’13. It has unutilised deposits of US $110mn and has raised funds through three modes for repayment of FCCB - Qualified Institutional Placement (QIP – Rs1.72bn/ US $31.7mn), Preferential Warrants to promoters (Rs2.1bn/US $38.5mn) and New Step down FCCB (Rs7.6bn/US $ 140mn – interest for first two years fixed at 7.5% and reduced to 3.75% for the next three years i.e. YTM of 5.37%). Due to this, the equity will be diluted by 13% in FY13, 4% in FY14 and 21% in FY16 and FY17.  Focus on quality of earnings and stable growth: During period FY07-10, SIL aggressively targeted top line growth, which affected balance sheet health and impacted cash flow once the environment turned cloudy. Realising this, SIL has shifted its focus towards quality earnings and stable growth.  Custom moulding to support growth for next two years: SIL is a domestic leader in the custom moulding / composites business. The company has a portfolio with diversified applications and has all the major global technologies available for manufacturing of composites. The management plans to leverage on acquisitions and focus on expansion of client base in India with cross selling of products and technologies in the automotive sector. We estimate custom moulding business to grow 15% YoY in FY13 and in FY14.  Focus on high growth and high return prefab business: Prefabricated structures are building structures fabricated in the factory and delivered as turnkey projects. Over the past five years, government spending on medical and public health, housing urban development and education has increased at 20% CAGR. Government focus on these social initiatives is expected to continue in the near term (FY13 and FY14) as well. We expect the prefab business to grow at 20% YoY in FY13 and FY14 respectively.  Monolithic Business: Cash flow improvement and stable order inflow: SIL introduced plastic composite based monolithic construction in India and does activity for slum rehabilitation, state housing boards etc. In the last few years due to the unearthing of multiple scams, and the resulting cautious approach of the government (from investment perspective). SIL witnessed slowdown in cash receivables and order inflows. It has therefore exercised deliberate restraint in the monolithic business to improve the working capital cycle.  Valuation: At CMP of Rs70 the stock is trading at 4.6x FY13E earnings and 5.0xP/E, 0.6x P/BV and 5.4 x EV/EBDITA of FY14E. We initiate coverage on the stock with a “BUY” rating and value the stock at 6.5x EV/EBDITA multiple of FY14 with a target price of Rs.91 per share.

Sintex Industries SELL CMP: Rs64 Target Price: Rs63 Downside: 2% :: Nirmal Bang

Sintex Industries

SELL

CMP: Rs64

Target Price: Rs63

Downside: 2%

QUERY CORNER - L and T Finance, Sintex, Nakoda, Bank of India, Glodyne, Orchid Chem:: Business Line

 

Buy Sintex Industries: Margins beat estimates: religare research

SINT posted a modestly better Q1FY13 on above-expected margins of 16.1% (vs. 14.5% estimated), even as topline/EBITDA/adj. PAT were down 3%/7%/20% YoY. While a depreciating Re, a deteriorating working capital position and growth concerns across segments would remain near-term stock overhangs, we believe these negatives are largely priced in at current levels. We value the stock at 6x one-year forward earnings to arrive at a PT of Rs 90. We restate a BUY on SINT given its attractive valuations.

Sintex Industries announced its Q1 FY13 results: Microsec

Sintex Industries announced its Q1 FY13 results on 13 July 2012. The company’s consolidated Net sales decreased by 3% YOY to INR1081 crore and its EBITDA decreased by 6% YOY to INR178crore. EBITDA Margin of the company declined from 17.0% to 16.4% YOY. Consolidated PAT Ex EO declined by 20% YOY to INR76 crore. We maintain Buy at the current level of INR67.

Investor's Eye: Update - HDFC Bank (Price target revised to Rs602), Sintex Industries (Operating performance in line)

Investor's Eye [July 13, 2012]  Sharekhan www.sharekhan.com

Summary of Contents STOCK UPDATE

Query Corner -sintex, Gati, Maruti, Reliance Mediaworks, McNally Bharat, Diamond Power Infrastructure, Century Enka: Business Line

Sintex Industries: 4QFY2012 Result Update -Angel Research

Sintex Industries Ltd - Slowdown in monolithic hits topline and margin :Sunidhi

Sintex Industries - Still some pain in store; visit note; Hold: Edelweiss PDF link

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Sintex Industries (SINT IN, INR 83, Hold)

Our recent interaction with Sintex Industries (Sintex) management reinforces that: (a) balance sheet strength and cash preservation are primary focus areas than topline growth as FCCBs near redemption in FY13; and (b) delay in government payments and orders persist and it’s too early to comment on business condition in UP after election (major state for monolithic business). Though the stock looks attractive on the valuation front at FY13E earnings, we believe it will remain under pressure till there is some clarity on FCCB repayment and the monolithic business starts showing traction. We maintain ‘HOLD’ with TP of INR78.

Initiating Coverage : Buy Sintex Industrie; Target : Rs 120 ::ICICI Securities

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

http://content.icicidirect.com/mailimages/ICICIdirect_SintexIndustries_InitiatingCoverage.pdf


C o n s e r v i n g   c a s h   f o r   f u t u r e   g r o w t h …
Sintex is one of the leading providers of plastic and textile products in
India. With a global footprint, the company is well diversified and has a
presence in businesses like building products, textiles and custom
moulding. The company gains from increasing government spending in
social welfare schemes as these are a huge opportunity set for the
building products segment. In custom moulding, it benefits from
increasing usage of composites. Though earnings growth is expected to
be moderate during FY12-13E due to a slowdown in order execution in
monolithics and industrial slowdown in the overseas businesses, we
expect an improvement in earnings  in FY14E. However, on account of
the company’s focus on improvement in balance sheet through working
capital management and moderation in capex, we expect a progressive
improvement in return ratios and cash flows.
Huge growth opportunity in building products segment
Sintex’ building products segment benefits from increasing government
spend in key areas like public housing, education and health. Monolithic
construction derives ~90% of its  revenues from the government and
gains on increase in spending in public housing and slum rehab projects.
Prefabs account for ~70% of revenue from government and benefit from
increasing spending in setting up prefabricated schools,  healthcare
centres, etc. though various schemes in education and healthcare. These
are the focus areas of the government and have seen an increase in
spending  at  14-15%  CAGR  in  the  past  five  years.  We  expect  these  areas
to remain the government’s priority and expenditure to increase in
coming years despite the government’s deteriorating financials.
Focus on conserving cash
Against FY08-11, when Sintex had negative free cash flow (FCF) due to a
delay in payments and high capex, we expect an improvement in balance
sheet and cash flows on account of the company’s focus on working
capital management and moderation in  capex.  We  expect  the  FCF  to  be
positive in FY13-14E and a progressive improvement in return ratios.
Valuations
At the CMP of | 101, Sintex is trading at 8.0x FY12E EPS, 7.2x FY13E EPS
and 6.3x FY14E EPS. On an EV/EBITDA basis, the stock is trading at 5.5x
FY12E EBITDA, 5.1x FY13E EBITDA and 4.3x FY14E EBITDA. On account
of the company’s focus on working capital management with progressive
improvement in return ratios, we are initiating coverage on the stock with
a BUY rating and target price of | 120/share based on SOTP valuation.

Q3FY12 Result Update :: Sintex Industries; South Indian Bank; Dewan Housing Finance :: Emkay

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Q3FY12 Result Update (January 17, 2012)

Result Update Sintex Industries Ltd Reco: BUY CMP: Rs 70 Target Price: Rs 93 Cut earnings; maintain buy on valuations ·      Sintex’s 3Q12 APAT was lower than est. due to lower monolithic (25% yoy revenue decline and fall in EBITDA margins) and subsidiaries performance (59% drop in PAT) ·      Given FCCB repayment next year and working capital requirements increasing, Mgmt in the call sounded cautious on growth and has reserved its comments on FY13E for now    ·      Working capital has gone up by Rs2.5bn vs. Sep11 (mainly due to monolithic), cash has gone down by Rs1.9bn vs. sep11 and debt remains at the same level. We Adj. FY12 capex to Rs4bn vs. Rs5bn earlier….   ·      Estimates cut by 23/28% for FY12/13E. Current valuations pricing in negatives - free cash-flow, part FCCB repayment likely through debt, business momentum. Maintain buy with revised TP of Rs93/Share   South Indian Bank Reco: HOLD CMP: Rs 23 Target Price: Rs 25 Risk to margins; Downgrade to HOLD ·      SIB’s Q3FY12 results inline with expectation with NII at Rs2.7bn and Net profit at Rs1.02bn. The growth was also aided by 20.4%yoy growth in Non interest income to Rs599mn ·      The NII grew by 33.5%yoy to Rs2.7bn led by strong ~30.6%yoy growth in advances, and 8bps qoq expansion in NIM’s to 3.05% ·      High concentration of gold loan at 26% of the book, a concern. Change in mgmt strategy to shift focus from gold loan to corp loan, could put pressure on margins ·      Elevated risks coming out of concentration in gold loan portfolio in terms of loan growth as well as NIMs. Downgrade to HOLD with revised PT of Rs25 Dewan Housing Finance Reco: BUY CMP: Rs 205 Target Price: Rs 275 Growth momentum continues ·      Dewan Housing Q3FY12 NII at Rs1.8bn and PAT at Rs750mn – as expected. Healthy loan growth with improvement in asset quality reaffirms our +ve stance on the business model ·      40%+ growth in sanctions/disbursements depicts resilience to interest rates / property prices. Higher dependence on bank term loans remains a key catalyst ·      First Blue Home Finance (FBHF) – Inorganic growth well on track with 18% loan growth, improved leverage and stable asset quality. Merger of DHFL+ FBHF around the corners ·      Strong business model with immense growth potential, stable asset quality and decent return ratios remain key positives. Maintain BUY with target price of Rs275

SINTEX INDUSTRIES: PINC research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

We met the management of Sintex Industries (SINT). Key takeaways from


the meeting (1) slowdown in Monolithic construction on account of delay in

clearances from the government,(2) Prefab segment is on track but might

see some collection slowdown from UP and Punjab due to elections and

(3) Domestic and Overseas custom moulding business to see slowdown

due to fall in auto sales growth and concerns over the European and US

economies. Post discussion with the management we downgrade our

revenue and EPS estimate for FY12e and FY13e. We downgrade our revenue/

EPS estimate by 8.5%/26% and 9.5%/25% for FY12e and FY13e respectively.

The stock has sharply corrected (44%) over the past 3 months on account of

forex losses and the slowdown impact in overseas markets. We revise our

TP from Rs240 to Rs115 (7x FY13e EPS) and believe that CMP of Rs65 factors

all negative aspects discussed below. At CMP of Rs65, the stock discounts

4.4x and 3.8x FY12e and FY13e EPS of Rs14.7 and Rs17.0 respectively.

Monolithic Construction: As per management there is a slowdown in Monolithic

construction especially on account of delay in getting clearances from the

government. The company has an order book of Rs29bn of which Slum rehabilitation

(Rs7.5bn), Railways (Rs2.5bn) and Defence (Rs2.5bn) cumulatively have ~45% of

the order book and where the slowdown/stoppage is being felt. We also noticed

stoppage of work in 4-5 sites out of the 18-20 sites in progress. We believe that

with the upcoming state elections (Feb’12) in UP (order book of Rs4.5bn) and

Uttarakhand the company will face delays in collection.

Prefab Segment: As per the management this particular segment is on track.

We believe going ahead this segment may also get some collection issues since

the plants in Baddi (HP) and Dadri (UP) supply to UP and Punjab which are going

for state elections in Feb’12.

Custom Moulding: As per the management there is likely to be a slowdown in

the domestic custom moulding business on account of slack in auto sales. Overseas

custom moulding will be hard hit due to European and US economic slowdown. As

per the management it is likely to be a flat to 5% negative growth in overseas

custom moulding.

VALUATIONS & RECOMMENDATION

We reduce our TP from Rs240 to Rs115 (7x on FY13e EPS) and maintain a ‘BUY’

rating on the stock. We believe the CMP factors the slump in overseas business,

forex loss impact and slowdown in the Indian economy.

Buy Sintex Industries - Concerns on moderation in growth and foreign debt priced in; Goldman Sachs

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Sintex Industries (SNTX.BO)
Buy Equity Research
Concerns on moderation in growth and foreign debt priced in; Buy
What's changed
The recent underperformance of Sintex (down 28% vs. Sensex down 7.3%
over 1m) can primarily be attributed to: (1) its $225mn FCCB outstanding in a
depreciating rupee environment; (2) exposure to the EU through its foreign
custom-moldings subsidiaries (FY12E - 23% revenue and 12% EBITDA) in a
slowing European economy, and (3) concerns on the company’s foray into the
power EPC business with the promoter group to set up a 300MW power plant.
Implications
We maintain our Buy rating as: (1) we expect strong overall growth at
14%/12% in FY12E/13E despite building in a slowdown in the European
business where we now expect 2%/5% revenue decline in FY12E/13E;
1HFY12 revenue grew by 23% yoy but we expect moderation in 2HFY12E;
(2) We believe concerns relating to its FCCB are overdone as, only
US$110mn has been utilized by the company so far and repayment is due
in March 2013. However, we assume the repayment of FCCB at Rs
55/US$ in our base case and assume MTM losses in FY12 at that same
rate; (3) We also lower our margins, building some loss of operating
leverage, resulting in a total decline of 120 bps over FY12E. Though, we
still expect positive cash flow before investing for FY12E-14E. Thus, as a
result, we cut our EPS for FY12E/13E/14E by 32%/19%/15%.
Valuation
Sintex trades at 3.6X 12 m forward P/E and 0.6X 12 m forward P/B vs. 5-
year median P/E of 11X and P/B of 2X, attractive valuations in our view
given normalized EPS growth in mid-teens over FY13E-FY14E and high
ROEs of 17%. We lower our TP to Rs 130 (from Rs 200 earlier) based on 7X
FY13E (from 10X earlier) due to moderating growth and flattening returns
over FY12.
Key risks
(1) prolonged slowdown in telecom and auto business segments, (2)
volatile raw material prices (3) business diversification
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List

Sintex Industries: Looking to improve the balance sheet profile, but at a cost of lower growth; cut PT to Rs115 ::JPMorgan

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��





We hosted Mr. Amit Patel, Managing Director of Sintex Industries (SINT), for
investor meetings. As the company has previously stated, it is looking to
improve its balance sheet profile. We believe SINT will significantly cut capex
and slow down execution of its working-capital-intensive monolithic business.
We cut our monolithic business growth assumption from 30% to 5%. As a
result, we cut FY12E-FY14E EPS by 14%-20% and lower our PT to Rs115.
 Looking to improve its balance sheet profile as the operating
environment becomes more challenging: We expect SINT to significantly
cut its capex over the next two years, while slowing down the execution of
its monolithic projects to preserve working capital, as payments from the
government have slowed considerably over past 1-2 quarters.
 Monolithic business likely to slow down sharply: Execution for the
monolithic business is slowing down, as payments from the government are
being delayed, and delays in government clearances and site handovers are
adding to the slowdown. We reduce our monolithic business growth
estimates for FY12/13 from 30% to 5%.
 Receivables cycle getting stretched, but cash flows to improve: We
believe that while working capital in FY12 is likely to deteriorate at the
margin on account of the delay in government payments, free cash
generation should improve aided by slower growth of the working-capitalintensive
monolithic business and lower capital expenditure.
 Comfortable on FCCB repayment: Management is comfortable on the
FCCB maturing in Mar 2013. The repayment of US$278MM will be partly
met through US$170MM of US$-denominated cash deposits. The remaining
US$110MM will likely be refinanced through a US$-denominated ECB.
 We reduce our PT to Rs115: We cut our FY12-FY14 EPS estimates by
14%-20% to incorporate lower growth for the monolithic business. We also
reduce our Sep-12 PT to Rs115 based on 7x FY13E P/E (from Rs208 based
on 10x FY13E P/E). We cut our target multiple from 10x to 7x to factor in
the lower growth outlook; our target multiple is in line with the domestic
peer group average. Key risks include deteriorating working capital, nonrelated
ventures, and a further slowdown in the European business.

Sizzling Stocks: Sintex Industries, Biocon ::Business Line

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Sintex Industries (Rs 63)

Sintex Industries has been in a long-term downward ever since peaking out in November 2010. After encountering resistance at around Rs 190 this July, the stock continued its downward path and has been on an intermediate-term downtrend. Decisively breaking through its short-term support at Rs 87, the stock nose-dived 32 per cent with good volumes in the previous week. The daily and weekly relative strength indices are hovering in the oversold territory. Further, the stock has breached the lower boundary of the Bollinger Bands signalling oversold. We see that there is an increase in volumes over the past four trading sessions.

As the stock is approaching its next important long-term support at Rs 57 and its daily and weekly indicators are oversold, a reversal from the support band will lift the stock higher to Rs 69 or to Rs 87 in the short-term. However, since the long-term downtrend is still intact, an emphatic breakthrough of the support will pave way for the stock to decline to Rs 49 or even to Rs 40 in the ensuing months.

Biocon (Rs 261.2)

The stock collapsed 17 per cent in the last week, strongly breaking through its key long-term base level zone between Rs 300 and Rs 310. With this plunge, the stock has reinforced its on-going downtrend that has been in place from its October 2010 peak of Rs 464. Volumes have been increasing over the past three trading sessions.

The stock is likely to test its immediate support in the zone between Rs 245 and Rs 250. Even so, as the stock has fallen steeply and its daily indicator is featuring at the oversold levels we don't rule out a minor corrective rally to Rs 275 or Rs 290 in the short-term. Next key resistances are at Rs 310 and Rs 350. Decisive breakthrough of the aforesaid support band will pull the stock down to Rs 215 or Rs 200 in the medium-term.

Sintex Industries:: Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Weak Corporate Governance To Cap Valuation
Sintex Industries (SIL) clarified on 17 November 2011 that it has received a
power EPC order from Shirpur Power, sponsored by its promoter. To fulfill the
ambition of its promoter, SIL tried to diversify in unrelated power and oil & gas
ventures in FY10, but following the concerns raised by investors, the promoter
decided to set up the power plant in his personal capacity. But SIL’s arm
accepting the power EPC order from Shirpur Power and hiding this information
from investors for four months has led to a corporate governance issue.
Factoring in the order win, we revise our FY13 revenue/EBITDA/PAT estimates
by 4.8%/1.1%/0.3%, respectively, but due to corporate governance issue we
downgrade SIL to Hold from Buy with a revised TP of Rs96 (from Rs167 earlier).
Sintex kept large order win a secret since a long time: In a clarification issued on
17 November 2011, SIL stated that Sintex Infra Projects or SIPL (a100% subsidiary)
received a Rs7bn order from Shirpur Power. As per information on the Department of
Heavy Industries’ web site, SIPL sub-contracted 2x150MW BTG (boiler, turbine and
generator) order worth Rs7bn to Bharat Heavy Electricals in July 2011. The delay in
making public the information regarding SIPL getting the order raises a serious
corporate governance issue. However, as per our interaction with SIL management,
total value of the order received by SIPL relating to the 2x150MW EPC project was
~Rs11bn out of which BTG order worth Rs7bn was sub-contracted to BHEL, while the
Balance of Plant (BoP) work would be executed by SIPL along with its arm Durha
Construction.
Related party transaction raises concerns over corporate governance: SIL’s
promoter and his relatives are shareholders of Sintex Power, one of the sponsors of
Shirpur Power. Receipt of such large order by SIPL, SIL’s arm, from Shirpur Power
raises the issue regarding related party transaction, particularly when SIPL has not
executed any power EPC job. Majority of established EPC/BoP players like BGR
Energy, Larsen & Toubro etc are facing dearth of orders, as the new order pipeline of
the power sector has dried up and competition intensified. In such a scenario, we are
not bullish about SIL’s entry into the power EPC business. Following aggressive
bidding at Rs37/MW, we expect SIL to report lower margin on this order. In addition,
due to the group company’s transaction, prospects of favourable working capital terms
can’t be ruled out, which might elongate SIL’s working capital cycle.
Valuation: Factoring weak corporate governance and other factors, SIL has declined
20% in the past three days and 40% in the past three months. It is trading at the lower
end of its valuation band at 4.1x/3.7x FY13E P/E and EV/EBITDA, below the sevenyear
median of 8.9x/6.6x Following weak corporate governance we expect the stock’s
valuation to remain caped and downgrade it to Hold with a revised TP of Rs96 (from
Rs167) valuing it at 3.9x EV/EBITDA (40% discount to its median of 6.6x).