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Sintex Industries – Disappointing Quarter

July 15, 2009

Sintex Industries reported 1QFY10 results below estimates – PAT of Rs606 mn (up 7.3% yoy) was lower than street expectations of Rs742 mn. Revenues at Rs6.6 bn (down 9.1% yoy) were lower than our estimated Rs7.3 bn mainly due to lower pre-fab sales. EBITDA margin at 13.2% (estimated 17%) was below estimate due to the lower contribution from the pre-fab segment and lower-than-expected textile margin.

The monolithic order book at end-1QFY10 has grown to Rs16 bn from Rs14 bn at end-FY2009, implying new order additions of about Rs3.2 bn during the quarter. Fresh orders of around Rs1.9 bn for rural housing are in the pipeline which may further increase FY2011E revenue visibility for the monolithic segment.

The plastic segment reported EBIT margin at 11.3% versus our estimated 15%. We believe the decline in margins was mainly on account of lower pre-fab revenues.

Sintex is expected to report an EPS of Rs 25.2 and Rs 28 for Fy10 and FY11 respectively. Existing investors can HOLD while fresh exposure can be taken around Rs 150 for a 12 months target of Rs 260.

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