Avoid Sintex, advises SP Tulsian

SP Tulsian of sptulsian.com advised avoiding Sintex Industries. According to him, one can book profits now and re-enter at Rs 52-54.

Tulsian told CNBC-TV18, “Sintex Industries’ numbers are good. I had expected about Rs 1,350 crore as the top-line and Rs 100 crore as profit after tax (PAT). The tax has seen to be the main reason because there is a tax reversal of Rs 25 crore against the normal tax liability of Rs 25 crore; so probably that Rs 50 crore has made the PAT bottom-line to reach to Rs 150 crore. But if you really see probably I do not think that other income really will be seen as a one-off income by the market, because that is not very high to the extent of maybe about Rs 28-30 crore. So one can expect that probably the best time has started for the company.”
He further said, “They have quarterly depreciation burden also of about Rs 50 crore, so they are now in the league of posting about Rs 500-600 crore as a cash profit, with no foreign currency convertible bonds (FCCB) liability issues now. Here on, the things are looking positive. But the stock will take some correction, maybe the stock can again dip to a level of Rs 52-54; so one should remain away at this stage. Those who are holding can go for the profit booking and can look to re-enter at Rs 52-54. But long-term view on the stock is very positive.”
“I am disappointed with EBITDA. My EBITDA calculation was closer to Rs 206-208 crore on Rs 1,350 crore top-line with PAT of about Rs 100 crore, so definitely that is the disappointment. Probably the tax reversal straightway has given a bump in the bottom-line by about Rs 50 crore. If you have the other income then obviously the margin is going to see at a lower figure. So this is going to be seen mildly negative by the market and profit booking can come in into the stock. That has already come in and can still make the stock to correct to about Rs 52 or so,” Tulsian added.