Buy Sintex Industries; target of Rs 135: Sunidhi Securities

Sunidhi Securities research report on Sintex Industries“Sintex Industries was incorporated as Bharat Vijay Mills in Kalol, Gujarat in 1931 and was engaged in the textile business over 1931-74. In 1975, SIL commenced manufacturing of plastic molded polyethylene liquid storage tanks including water tanks and introduced new plastic products like doors, window frames and pallets. Sintex group has 36 manufacturing plants in India and abroad. In 1995, company was renamed as Sintex Industries and commenced manufacturing of SMC molded products, undertook modernization and expansion of the textile unit and commenced structured yarn dyed business. SIL entered prefab structures business in 2001 and started monolithic business in 2005. Today, SIL, a business ‘Superbrand’ is a plastic processing MNC with operations in 13 manufacturing locations and 12 nations across four continents. SIL divides its business into two segments namely plastics and textiles – the plastics business contributes more than 90% of topline. Exports constitute about 25% of sales.""During Q2FY15, net profit rose 47% to Rs107.4 crore on 23% higher revenue of Rs1680 crore. Q2FY15 EPS stands at Rs3.0. OPM and NPM stood at 17.1% and 6.4% against 15.5% and 5.3% respectively in Q2FY14. During H1FY15, net profit rose 42.7% to Rs167.4 crore on 21% higher revenue of Rs3025 crore. H1FY14 EPS stands at Rs4.8.  During FY14, consolidated net profit rose 13% to Rs364.7 crore on 15% higher sales of Rs5864 crore. EPS stood at Rs11.7. A dividend of 70% was paid. Sintex’s customised moldings business caters to Fortune 500 customers across continents and various sectors. It intends to leverage these customers and potentially enhance domestic manufacturing and outsourcing. This will significantly improve margin in the business over the next couple of years. Q2FY15 is a reflection of strong growth and a drastic improvement in business sentiment. Utilisations are picking up across businesses, upturn in margins and topline growth is clearly visible. The initiatives on clean India campaign have thrown open new set of opportunities to SIL.""Despite economic adversities across the globe, SIL grew its topline by about 21 percent in H1FY15 and strengthened its balance sheet. This was achieved through a disciplined approach in streamlining business systems and processes to maximise efficiencies and a continued focus on improving the business mix. Now, SIL is perfectly poised to accelerate profitable business growth going forward with a hawk eye on maintaining a lean balance sheet. At the current market price of Rs81, the share is trading at a P/E of 8.0x on FY15E and 6.0x on FY16E. We recommend BUY with a target price of Rs135 in the medium-to-long term at which the share will trade at a P/E of 10.0x on FY16,” says Sunidhi Securities research report. 

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