Sintex Industries Q3 PAT seen down 8% at Rs 76 cr

Sintex Industries that manufactures plastic pallets, water storage tanks, doors and windows, and solar water heaters is set to announce its results for the quarter ended December 2012 today.

Analysts on an average expect consolidated profit after tax of the company to fall by 8 percent year-on-year to Rs 76 crore in the quarter. However, adjusted profit after tax is seen going up by 10 percent compared to a year ago period.

In the December quarter of previous financial year 2011-12, the company had incurred a foreign exchange gain of Rs 13.54 crore on its FCCBs.

Total income is likely to go up by 2 percent to Rs 1,184 crore from Rs 1,161 crore during the same period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to go up by 15 percent YoY to Rs 187 crore in the third quarter of FY13. Operating profit margin is seen rising by 175 basis points to 15.8 percent.

Analysts expect moderate set of results from the company. Analysts say any growth in numbers will be evident on a weaker base in Q3FY12, the time from which company started witnessing challenges across its monolithic and composite segments.

They feel elevated working capital requirements are expected to hurt the company’s valuations this quarter as well.

Growth in Monolithic business expected to remain flat

Analysts expect slowdown in monolithic segment on the back of delayed payments and a stagnant order book to dampen overall growth.

Sintex is making strong efforts to revive this business. The company has managed to resolve work on three out of almost 7-9 problematic sites.

Performance of other important segments

Analysts say overseas custom moulding business will continue to face challenges due to macro slowdown. The management has targeted only 5-6 percent growth from this segment for FY13.

India business --- custom moulding + pre-fab --- will remain the bright spot and are expected to continue to show strong returns, say analysts.

In third quarter of previous financial year, custom moulding India performance was weak on the back of strike at the Maruti plant.

FCCB concerns have alleviated

Sintex has already tied up funds to the tune of USD 292 million and is waiting for RBI nod to undertake redemption. The redemption of FCCBs will be due in March 2013.

Return ratios & debt:equity to improve post the redemption

Earlier the management had indicated that they are looking to improve return on capital employed from 13.3 percent currently to about 19-20 percent by FY14.

Analysts feel the debt to equity ratio is also expected to improve from 1.2 times to 0.8 times.

The company is also looking at generating Rs 250 crore of free cash flow in FY13.