Angel Broking has recommended a buy rating on Sintex Industries , with price target of Rs 293, in its report dated November 17, 2009. The stock closed at Rs 232.10 on November 19, 2009.
"Our estimates imply earnings growth of 25% yoy in H2FY10E, Sintex might surprise positively. Secondly, the better performance is likely to be led by high margin verticals - (1) monolithic (EBITDA margins of 18-19%), (2) Standalone prefabs-ex BT Shelters (18% EBITDA margins) and (3) standalone electrical custom moldings (25% EBITDA margins). Further, with improvement in demand environment and margins, subsidiaries are set for yet another positive surprise amidst negligible contribution built in. Our earnings estimate stands at Rs 24.4 and Rs 29.3 for FY10E and FY11E respectively. At CMP of Rs 220, the stock is trading attractively at 7.5x FY11E earnings and 1.3x FY11E Book Value. This is 25% discount to its 5 year average multiple of 10x 1 year Forward earnings. We reiterate BUY on Sintex, with a target price of Rs 293/Share, amidst - (1) attractive valuations, (2) likely positive surprises, (3) strong balance sheet with cash in hand of Rs 12 billion and (4) healthy ROE of 19%," says Angel Broking report.
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