Buy Sintex Industries; target of Rs 89: Dolat Capital

Dolat Capital is bullish on Sintex Industries and has recommended buy rating on the stock with a target of Rs 89 in its October 15, 2012 research report.

“Sintex Industries, for the quarter under review, Sintex revenues increased by 3% YoY to Rs 11.9bn as against Rs 11.5bn in Q1FY12 (Dolat estimates Rs 11bn) led by strong performance from its prefabs segment which grew 37% YoY. The party spoiler continued to be monolithic & the overseas custom moulding segment which reported de-growth of 14% & 6% respectively for the quarter under review.”

“Lower margins in the custom moulding & monolithic segment resulted in contraction of overall margins by 230 bps to 15.4% (Dolat estimates @16.8%). As a result, operating profit for the quarter fell 10% YoY to Rs 1.83bn. Subdued operating performance resulted to PBT declining by 18% YoY to Rs 1.03bn. However Forex MTM loss of Rs 49mn in Q2FY13 as against a huge loss of Rs 596mn resulted in the reported PAT growing by 86% to Rs 724mn as compared to Rs 388mn posted in the corresponding quarter of the previous year. However adjusting for forex losses, reported PAT would have been lower by 21% to Rs 772mn as compared to Rs 984 mn.”

“Sintex currently trades at 5.8x & 4.6x its FY13E & FY14E earnings of Rs 12.7 & Rs 16 respectively. With the revenue visibility gradually improving across businesses, we are valuing the company on FY14E earnings. We thereby revise our rating to “Buy” with a price target of Rs 89, reflecting an upside of 21% from the current levels,” says Dolat Capital research report.

Institutional holding more than 40% in Indian cos  

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