SINTEX IND (SINT IN)- Results Q1FY14

INDSEC
CMP

40

Rating

NA

Target

NA

Upside

NA

SintexIndustries(SINTINEquity)reportedQ1FY14results.
KeyTakeaways:SintexreportedQ1FY14results,whicharebelow
ouraswellasstreetexpectations.
(Rs.Mn)
Revenue
EBITDA
APAT

Reported
11,281
1,609
466

Estimates
12,264
1,754
657

Variance
8.02%
8.27%
29.07%

Result Highlights: Company reported consolidated sales of Rs.11

bn(+4%y/y)ledbystronggrowthintheprefabsegment.EBITDA
wasreportedatRs.1.6bn(9%y/y)whichimpliesamarginof14%
(217 bps y/y). Margin got impacted in Q1FY14 on account of
monolithicbusinessanddomesticcustommolding.ReportedPAT
wasatRs.466mn.(0.4%y/y),whichimpliesaPATmarginof4%(
20bpsq/q).
AggressiveCapitalexpenditureonanvil:BoardhaslookedatNew
Textile policy in Gujarat that gives textile companies significant
advantage in VAT, interest subsidies, power cost and overall re
searchanddevelopmentinTextileparks.Thecapitalexpenditure
envisaged for FY14 is Rs.3.54bn and the Spinning capex of
300,000 spindles can be, as a thumbrule, Rs.18bn, with 24
monthsoftime tobeoperational.However,managementwould
give more clarity on thisnew significant expansion, in the next
twoquarters.

STOCKDETAILS
BSECode

502742

(Rsmn)

Q1FY14

Q4FY13

Q1FY13

Y/Y

Q/Q

Revenue

11,281

14,013

10,806

4.4%

19.5%

EBITDA

1,609

1,890

1,776

9%

14.9%

EBITDA(%)

14%

13%

16%

(217)

78

RPAT

466

1510

468

0.4%

69.1%

PAT(%)

4%

11%

4%

(20)

(664)

ReportedEPS

1.5

4.9

1.5

0.0%

69.4%

Q1FY14ResultUpdate:

Results below expectation: Among the revenue drivers, Sintex ob

served a strong growth from Prefab segment, which was primarily
duetoexecutionoflargeorders.Substantialneworders,forprefab
segmentareexpectedtocontinuefromMadhyaPradesh,Maharash
tra.Toaddtotheexistingstates,companymayalsofetchneworders
from Bihar. The major growth contributor for FY14 will be (1) pre
fabricatedsystems;wherecompanyexpects2025%revenuegrowth
and(2)overseascustommouldingsegment.

Exhibit:SegmentwiseRevenuebreakup
Rs.mn
Q1FY14
Q1FY13
Var(%)
BuildingSegment
4,672
4,515
3%
PreFabricatedBuilding
2,048
1,724
19%
MonolithicConstruction
1,869
2,151
13%
StorageTanks
755
640
18%
CustomMolding
5,459
5,154
6%
India
1,872
2,239
16%
Overseas
3,587
2,915
23%
Textiles
1,108
1,096
1%

MonolithicBusinesssegment,alaggard:Thisistheseventhquarter
inrow,wherecompanydeliberatelycurtailedtheoperationstoopti
MarketCap(Rsmn)
12240
mize and channelize the resources to economically favorable seg
ment. As a part of the strategy, company continues to prefer exit
Sector
PlasticProducts
fromslowmovingsitesorlessremunerativeprojects.Hence,SILex
pects to clock a revenue of Rs.7.5bn for FY14 with improvement in
YearEnd
March
operatingmarginsfrom14%inQ1FY14toashighas18%inQ4FY14;
andthiswillhelpinreducingthestressonworkingcapitalcycle.
52w.High/Low
75/36

The growth drivers: Custom moulding segment in overseas showed

AvgDailyTurnover
178mn
strongoverseasgrowthbecauseofstrongacquisitioninlastquarter.
SharesinIssue
330mn
The major results will be reflected from H2FY14 onwards. Domestic
mouldingsegmentisdependentonautomotivesector,whichiscur
BSESensex
19958
rently a victim of sector specific slowdown. As per management,
recoveryisduewithintwoquarters.Theotherdomaincompanymay
NSENifty
6009
continuetofocuswillbeIndustrial,InstitutionalandElectrical.Mar
gins are attractive in Industrial and Institutional business and they
Aboutthecompany:
mayactasapossiblegrowthdriver,too.
Sintex Industries is a dominant player in the plastic and textile
businesssegments.TheCompanymanufacturesarangeofbuild Costcuttingmeasures:Asapartofrevitalizingthefortunes,(1)Sin
ingmaterialsandcompositesatits16plantsacrossIndia.Subse texhasclosedtheoperationsinwatertankBusiness,locatedinKar
quent to several strategic acquisitions the Company also pos nataka and Gujarat; with one more plant in anvilDaman; (2) Do
sesses a global footprint that is spread across the continents of mestic and International plants will be reassessed for the capacity
USA and Europe. In the textile segment the Company is focused thatwillberequiredtosuitthematchingeconomicenvironment.
on niche offerings, possessing specialization in mens structured
shirtingintheverypremiumfashioncategory.
Valuationandview:AttheCMPofRs.40,Sintextradesat4.0xFY14E
and3.5xFY15Eearnings.Withpersistentissuesfrom(1)Monolithic
segmentshowingnorecovery,(2)WorkingCapbeingstretchedand
CONSOLIDATEDFINANCIALS
(3)capexofalmost2xtheavg.maintenancecapexincoresegments
likecustommoulding,wefactoredinstrainonfreecashflows.
Rsinmn
FY12
FY13P
FY14E
FY15E
NSECode

SINTEX

Revenue

44,367

50,794

55,745

60,798

EBIDTA

7,015

8,899

8,362

8,842

EBIDTA(%)

14.7

17.5

15.0

14.5

PAT

3,068

3,798

3,196

3,646

EPS

11.0

11.5

9.7

11.0

P/B(x)

0.4x

0.4x

0.4x

0.3x

P/E(x)

3.5x

3.4x

4.0x

3.5x

ROE(%)

12.3%

12.6%

8.7%

8.6%

Webelieve,Sintexsfocuswhichhasbeenontheruralaswellas
urban building products such as prefab, monolithic structures and
custom mouldings (auto& non auto), gets diluted with the man
agements latest commentary in pursuit of an aggressive ambitions
intextilesegment,whichwouldfurtherputstrainonthecompanys
financials.Toadd,wefinditcontradictingthatthisplanisdespite
companysstructurallyoptimisticviewonmajoroperationalsectors
likerecoveryincustommouldingsegment,recoveryofmarginsin
monolithicsegment,etc.
We wait for further clarity to emerge on the this plans that can
change the future outlook on company. Hence, we Suspend our
ratingsonSintexfromourearlierrecommendationofBuy.

Source:Company,Indsec

INDSEC SECURITIES AND FINANCE LTD.

ROHIT NATARAJAN
rohitn@indsec.co.in
+91 22 61146118

JULY 15, 2013

INDSEC
Financials:

(inmn)
Assets
TotalCash&ST
Investments
TotalReceivables
Inventory
OtherCurrentAssets
CurrentLiabilities
AccountsPayable
Provisions

SUMMARYBALANCESHEET
FiscalYearEnding
FY12
FY13

TotalCurrentLiabili
ties
NCA(inc.Deftax)
NetProperty,Plant&
Equipment
LongtermInvest
ments
CWIP
TotalAssets
Liabilities
SecuredDebt
UnsecuredDebt
TotalDebt
Equity
TotalLiabilitiesAnd
Equity

(inmn)

7,207
16,535
3,955
7,890

6,346
3,445

4,642
17,395
4,175
9,046

6,282
4,159

SUMMARYINCOMESTATEMENT
FiscalYearEnding
FY14

7,068
19,091
4,643
9,927

6,894
4,567

FY15

8,709
20,883
5,079
10,859

7,459
4,964

FY13

FY14

FY15

NetRevenues

44,368

50,794

55,745

60,978

CostOfRevenues(inclStock
Adj)

34,430

38,096

42,366

46,343

GrossProfit

9937

12699

13379

14635

SellingGeneral&AdminExp.

1231

1778

2230

2592

OtherOperatingExpenses

2187

2032

2787

3201

EBITDA

6520

8889

8362

8842

10,441
22,435

11,461
26,886

12,423
30,726

OtherIncome

672

596

560

560

EBITDA,includingOI

7192

9485

8922

9402

28,582

33,415

33,525

33,307

NetInterestExp.

1358

1462

2076

1695

EBTExclUnusualItems

4155

5650

4495

5007

EarningsfromCont.Ops.

4024

4747

3995

4557

TotalExtraordinary

466

903

500

450

NetIncome

3068

3798

3196

3646

1,423
2,531
55,949

17,776
13,139
30,915
25,034

1,423
2,531
59,804

16,851
12,712
29,562
30,242

55,949

59,804

1,423
2,531
64,365

15,864
11,968
27,831
36,534
64,365

1,423
2,531
67,986

14,624
11,032
25,656
42,330
67,986

FY15

PBT&Extraordinary
Depreciation&Amort.,
Total
Afterotheradjustments

4,596 4,738 5,398 6,188

(Inc)/DecinWorking

(6,262)(5,457) 1,114 (1,407)

Taxes

(1,160) (669) (1,383) (1,906)

1,678 2,054 2,142 2,216

28 990

CashfromOps.

(415) 2,128 7,299

CapitalExpenditure&

(5,766)(6,514)(2,503) (2,403)

CashfromInvesting

6,081

(3,414) (6,394) (2,503)

(2,403)

NetBorrowings
3,175 1,968
IssuanceofCommonStock

(297) 1,855
IssuanceofDividend

(205) (254) (265) (265)

CashfromFinancing

1,641 2,604 (2,496)

Extraordinaryreceipts/

FY12

9,791
23,413

SUMMARYCASHFLOWSTATEMENT
FiscalYearEnding
FY12
FY13
FY14

Others

inmn

(2,177)

(466) (903)

NetChangeinCash

(2,188) (1,662) 2,300

BFCash

9,861 7,207 4,642 7,068

1,501

ENDCash

7,207 4,642 7,068 8,709

NIExclExtraItems

3068

3798

3196

3646

NIInclExtraItems

2602

2895

3696

4096

BasicEPS

11.0

11.5

9.7

11.0

SharesOutstanding

271

330

330

330

Profitability
ReturnonAssets
ReturnonCapital
ReturnonEquity
MarginAnalysis
GrossMargin
EBITDAMargin
NetIncomeMargin
ShortTermLiquidity
CurrentRatio
QuickRatio
Avg.DaysSales
Outstanding
Avg.DaysInventory
Outstanding
Avg.DaysPayables
LongTermSolvency
TotalDebt/Equity
EBITDA/Interest
ValuationRatios
EV/EBITDA
PER
P/B

FY12

5.5%

12.3%

22.4%
14.7%
6.9%

SUMMARYRATIOS
FiscalYearEnding
FY13

6.4%

12.6%

25.0%
17.5%
7.5%

FY14

5.0%

8.7%

24.0%
15.0%
5.7%

FY15

5.4%

8.6%

24.0%
14.5%
6.0%

0.4x
0.4x

0.5x
0.5x

0.6x
0.6x

0.5x
0.5x

136

125

125

125

42
52

40
45

40
45

40
45

1.2x
5.3x

4.8x
3.5x
0.4x

1.0x
6.5x

4.0x
3.4x
0.4x

0.8x
4.3x

3.8x
4.0x
0.4x

0.6x
5.5x

3.2x
3.5x
0.3x

INDSEC SECURITIES AND FINANCE LTD.

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INDSECRatingDistribution
BUY:Expectedtotalreturnofover25%withinthenext12months.
ACCUMULATE:Expectedtotalreturnbetween10to25%withinthenext12months.
REDUCE:Expectedtotalreturnbelow10%withinthenext12months.
SELL:Expectedtotalreturnisbelowthemarketreturnwithinthenext12months.
NEUTRAL:Noinvestmentopiniononthestockunderreview.
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AnalystsholdinginthestocksmentionedintheReport:NIL

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CONTACTDETAILS
ContactInformation

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NandkishoreGupta

ngupta@indsec.com

02261146101/02

ResearchTeam

SectorsCovered

ContactInformation

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Cement,CapGoods&MidCaps

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02261146105

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BankingandMidCaps

shaileshk@indsec.co.in 02261146139

RohitNatarajan

Engg,Construction,Infrastructure&MidCaps rohitn@indsec.co.in

02261146118

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02261146139

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ContactInformation

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02261146125

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02261146133

Foradditionalinformationpleasecontact:research@indsec.co.in,orvisitusatwww.indsec.co.in
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