Sintex Industries Q2 PAT seen down 8.7% at Rs 66 cr

Plastic products manufacturer Sintex Industries will declare its second quarter (July-September) numbers today. According to a CNBC-TV18 poll, analysts on an average expect consolidated profit after tax of the company to fall 8.7 percent year-on-year to Rs 66.1 crore during the quarter, impacted by weakness in domestic custom moulding and monolithic businesses.

Total income may rise 3.5 percent to Rs 1,240 crore in September quarter from Rs 1,199 crore in a year ago period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to decline 1.6 percent on yearly basis to Rs 180 crore and EBITDA margin may slip 80 basis points Y-o-Y to 14.5 percent in the quarter gone by.

Analysts feel the trends seen in Q1 results will continue to reflect in Q2 results as there has not been any material change on ground in terms of business fundamentals for Sintex.

They believe the company could see a surprise mark-to-market forex loss (around Rs 60-65 crore) on its unhedged portion of FCCB (USD 110 million).

Segmental performance

Prefab segment (like first quarter) will be the key growth driver due to pick up in demand, say analysts.

However, overall incremental growth in prefab segment is expected to moderate to 15 percent Y-o-Y (as against 19 percent Y-o-Y in Q1FY14)

Monolithic segment will post 25-30 percent Y-o-Y de-growth, mainly due to closing down of works sites.

Performance of Custom Moulding Segment (CMD) remains key in the quarter gone by.

In case of CMD, analysts expect sales to remain modest at around 10 percent Y-o-Y growth domestically due to ongoing slowdown in auto sector while overseas (NIEF and Wausaukee) sales are expected to rise around 10 percent Y-o-Y due to recovery in demand and rupee depreciation.

Sequentially, margins are expected to remain almost flat for all verticals, feel analysts.

On the business front

Monolithic segment, which contributes 20 percent of revenues, has not been doing well for a number of quarters due to delayed payments and stagnant order book.

Management guidance for FY14

The company expects 15 percent consolidated sales growth and margin expansion of 1 percent for the fiscal year 2013-14.

Key issues to watch out for: 1) Signs of improvement in working capital; 2) Stabilisation in operations of recent acquisitions in Germany and Poland, along with outlook on overseas composite business; and 3) Cash flow health and scope for deleveraging.