DBFS RESEARCH

EQUITIES INDIA-Entertainment
Associate of Doha Bank

Sintex Industries

March 2015
Analyst
E-mail

: Saji John
: research@dbfsindia.com
: 0484-3060129

CMP : Rs . 115
Target Price: Rs. 175
Stock Rating

BUY

Strong momentum across prefabricated

building systems, Custom Molding and Textiles

Robust orders flow in Prefabs for toilet

blocks,
Aangan wadis schools, agri sheds
besides other rural programs

Custom molding grows 37%, both global

and domestic business see size able traction.

Textile business see 22% growth with

improved margins of over 400 bps

Stock Data
Weak quarter for monolithic; Due to challenging times
and policy paralysis, several important decisions pertaining
to low-cost housing and funds sanction for these projects
were put on the back burner. It has resulted in a sectoral
slowdown. outlook elusive yet optimistic: Monolithic
segment posted ~40% YoY de-growth in 3Q, along with
margin contraction of 300-350bps QoQ due to certain
cancellations. Outlook remains elusive with a revival
dependent on clarity on governments plan to implement
mass housing projects. FY15 revenue guidance moderated to
INR6-7b (v/s INR7.5b+ earlier).

Revise estimates: We cut FY15E-17E revenue for

monolithic segment by 15-20% and raise overseas
composites revenue by 5-13%. This translates into 1-3% cut
in EBITDA estimates. Lower tax estimate on the back of
MAT credit to be assumed in the coming quarters; we raise
FY15E/16E/17E EPS by 6%/5%/3%.

CMP (24.03.2015)

120

Stock Beta
NSE Code
BSE Code
Bloomberg Code
Reuters Code
52 Week High
52 Week Low
Market Cap (In crore)

2.61
SINTEX
502742
SNTX:NS
SNTX.NS
136.8
40.5
4835.5

Face Value
DPS
PE Multiple

1
0.70
10.7

Financial
Summary

FY14

FY15E

FY16E

Revenue

5842.62

6960.00

8029.52

9703.41

EBITDA

942.35

1225.22

1523.44

1767.42

16.13

17.60

18.97

18.21

PAT

363.40

510.36

692.51

839.95

EPS

11.72

12.07

16.37

19.86

PE

10.24

9.95

7.33

6.04

0.10

0.11

0.14

0.15

EBITDA
Margin (%)

ROE (%)

FY17E

DBFS RESEARCH
March 2015
Sintex Industries

EBITDA in line; business recovery on track; FCCB overhangs

remain in EBITDA in line; lower tax boosts PAT: Sintex
Industries (SINT) 3QFY15 revenue grew 32% YoY to
INR18.3b (v/s est. of INR17.1b), while marginal correction in
operating margin translates into EBITDA at INR3.1b, +25%
YoY (v/s est. of INR3b). MAT credit brought down the
effective tax rate to ~7% in 3Q (v/s 32% in 1HFY15), which
boosts PAT to INR1.7b, +90% YoY (v/s est. of INR1.2b).
Momentum intact in Prefab, Textile; asset stabilization
drives composites: Prefab and Textile verticals continue to post
strong sales growth (28% YoY and 23% YoY respectively)
along with margin expansion led by better utilization and strong
product mix. Contribution from the recently-acquired Simonin
boosts revenue from overseas composites by 55% YoY.
Domestic composites recorded 13% YoY growth in revenue
along with 100bps QoQ uptick in margins.
Valuation and investment thesis
Valuation and view - business recovery cycle on track: SINTs
business cycle is favorably poised with an improvement in
macro outlook and likely uptick in government and private
spending in related verticals. FCCB dilution concerns remain an
impediment albeit a significant conversion (~50%) is behind.
The stock trades at 6.04x FY17E EPS, 6.67x FY17E
EV/EBITDA. We value SINT at 7.86x FY17E EV/EBITDA
(v/s 8.45 x FY16E earlier) on the back of improved business
outlook. This translates into fair value of INR152/share.
However we also adjust for potential FCCB-linked dilution to
reach target price of INR148/share (26% upside). Maintain

Buy.

Shareholding Pattern
Promoter

37.72

FII

21.66

DII

19.53

Others

21.09

DBFS RESEARCH
March 2015
Sintex Industries

Segment wise Performance

Textiles

1108

1306

1516

1530

1535

1710

1860

1720

5460

6825

Plastics

10131

12324

12234

18340

11880

15030

16400

19081

53029

62391

Buliding
Materials

4672

6444

5815

10440

5670

8100

7590

9144

27371

30504

2048

3031

3215

3440

2600

3960

4130

4212

11734

14902

1869

2663

1950

6060

2370

1310

2610

3969

12542

12259

755

750

650

940

700

830

850

963

3095

3343

Composite
s

5459

5880

6419

7900

6210

6930

8810

9937

25658

31887

Domestic

1872

2351

2690

3680

2530

2910

3040

3988

10593

12468

Foreign

3587

3529

3729

4220

3680

4020

5770

5948

15065

19418

Total

11281

13649

13750

19870

13415

16740

18260

20801

58465

19418

Prefab

Monolithi
c and EPC

Tanks

Consistent verticals (35% mix): Momentum

intact in Prefab and Textile

Prefab continues strong sales growth of 28% YoY (v/s

31% in 2Q), while EBITDA margin expanded 0.5pp QoQ to
26%. Execution in education (class rooms), healthcare and
sanitations remain key drivers. Opening up of opportunities in
CSR, clean India etc offers renewed growth drivers in coming
years.

Textile (Fabric) segment recorded 23%YoY growth (v/s

31% in 2Q) coupled with 3pp QoQ margin expansion to 27.9%.
Deeper penetration to new and existing customers drove the
growth while enriching product portfolio, de-bottle necking of
facilities and high utilization boost operating margins.

In tank segment, the company recorded revenue growth of

31% (11% in 2Q), with flattish QoQ trend in margins at 11.8%
Improving verticals (45% mix): Composites - benefits new
assets percolating

Domestic composites recorded 13% YoY growth in revenue

along with 1pp QoQ uptick in margins to 19.4% on the back of foraying
into value added offerings. Synergistic benefits with global subsidiaries
are gradually improving.

In overseas business, 3QFY15 witnessed a strong scale up in

revenue (55% YoY) driven by contribution from Simonin (acquired in
July 2014), and steady rampup in Poschmann (Germany and Poland).
Simonin is contributing mid-teen EBITDA-based RoCE with outlook of
margin improvement from 8% to 9-10%.
Management expects easing of investment in defense sector
(means higher outsourcing by OEMs), revival in economic outlook and
stimulus announced by ECB to have favorable impact on domestic and
overseas composite segment.
Struggling verticals (10%): Weak quarter for monolithic; Outlook
elusive, yet optimistic
Monolithic segment posted ~25% YoY growth in (3rd quater),
along with margin contraction of 3-3.5pp QoQ due to certain
cancellations.

Current facility utilization is at 33%. Outlook remains elusive

with revival dependent on clarity on government plan of implementing
mass housing projects. FY15 revenue guidance moderated to INR6-7b
(v/s INR7.5b+ earlier).

DBFS RESEARCH
March 2015
Sintex Industries

Ratios

2014E

2015E

2016E

2017E

EPS

11.72

12.07

16.37

19.86

Growth %

3.26

2.95

35.69

21.29

Book Value

112.28

108.09

118.80

136.46

Divd. Per
Share

21.78

29.61

27.50

27.50

Dividend %

0.70

0.70

0.65

0.65

P/E

10.24

9.95

7.33

6.04

P/BV

1.07

1.11

1.01

0.88

EV/
EBITDA

11.22

9.73

8.45

7.86

Divident
Yield

18.15

24.68

22.91

22.91

EBITDA

942.35

1225.2
2

1523.44

1767.4
2

Equity
Shareholder

31.12

42.30

42.30

42.30

Average RoE

0.10

0.11

0.14

0.15

Average
RoCE

0.07

0.10

0.11

0.12

Avergae RoA

0.04

0.13

0.15

0.16

Turnover
Ratios

13.25

15.02

16.48

17.29

Debtors (Days
Sales)

138.0
0

130.00

125.00

123.00

Inventory
(Days Sales)

28.00

27.00

25.00

21.00

Leverage
Ratios

2.57

2.15

2.18

2.13

Debt/ Equity

1.08

0.88

0.74

0.62

DBFS
RESEARCH
March 2015
Sintex Industries

Rs.in crore
Income Statement

Mar '14

Mar '15E

Mar '16E

Mar '17E

Income
Sales Turnover

5,979.05

7112.80

8,197.60

136.43

152.80

168.08

184.89

5,842.62

6960.00

8,029.52

9,703.41

3,396.04

3983.17

4590.66

5834.10

9.84

17.00

50

50

Purchase of stock in trade

154.21

161.92

145.73

167.59

Employee Cost

633.05

683.69

786.25

904.19

Other Expenses

707.13

889.00

933.45

980.12

Total Expenses

Excise Duty
Net Sales

9,888.30

Expenditure
Raw Materials
Stock Adjustments

4,900.27

5734.78

6506.08

7935.99

EBITDA

942.35

1225.22

1523.44

1767.42

Depreciation

254.76

279.29

307.216

334.75

EBIT

687.59

945.93

1216.22

1432.67

Interest

289.38

297.85

327.64

344.02

Other Income

99.28

31.60

34.76

31.284

Extra-ordinary items

16.06

0.00

EBT (Post Extra-ord Items)

481.43

679.68

923.35

1119.93

Tax

118.03

169.49

230.84

279.98

363.4

510.36

692.51

839.95

Reported Net Profit

Financial Summary

Mar '14

Mar '15

Mar '16

Mar '17

Revenue

5842.62

6960.00

8029.52

9703.41

EBITDA

942.35

1225.22

1523.44

1767.42

EBITDA Margin (%)

16.13

17.60

18.97

18.21

PAT

363.40

510.36

692.51

839.95

Net Profit Margin(%)

6.22

7.33

8.62

8.66

DBFS
RESEARCH
March 2015
Sintex Industries

Consolidated Balance Sheet Mar '14 Mar '15 Mar '16

Sources Of Funds
Total Share Capital
31.12
Equity Share Capital
31.12
Share Application Money
28.31
Preference Share Capital
0.00
Init. Contribution Settler
0.00
Preference Share Application
0.00
Money
Employee Stock Opiton
0.00
Reserves
3484.43
Networth
3543.86
Minority Interest
0.00
Long term borrowing
3210.39
Deffered tax libalities (Net) 335.83
Other long term Libailities 62.34
Long term Provisions
15.05
Total Debt
3623.61
Short term Borrowing
608.97
Trade Payable
822.43
Other Current liabilities
388.74
Short term Provision
107.92
Total CL & Provisions
1928.06
Total Liabilities
9095.53
Application Of Funds
Fixed Assets
3740.34
Goodwill on consolidation 186.49
Non current investments
248.66
Deffered tax assets (Net)

6.95

Long term loans & Advance 1691.95

Other non - Current Assets 46.66
Non current Assests
5921.05
Inventories
451.10
Current Investments
57.13
Sundry Debtors
2078.46
Cash and Bank Balance
271.98
Short term Loan & Advances 217.95
Other Current Assets
97.86
Total CA, Loans & Advances 3174.48
Net Current Assets
1246.42
Total Assets
9095.53
Contingent Liabilities
315.08
Book Value (Rs)
112.28

Mar '17

42.30
42.30
28.21
0.00
0.00

42.30
42.30
28.21
0.00
0.00

42.30
42.30
28.21
0.00
0.00

0.00

0.00

0.00

0.00
4529.76
4572.06
0.00
3370.91
403.00
71.69
14.30
2961.66
639.42
986.92
524.80
124.11
2275.24
9808.96

0.00
4982.73
5025.03
0.00
3033.82
423.15
78.86
15.73
3551.55
671.39
1016.52
551.04
130.31
2369.27
10945.85

0.00
5730.15
5772.45
0.00
2882.13
486.62
90.69
19.66
3871.19
684.82
1169.00
633.69
136.83
2624.34
12267.98

3844.27 4036.48
195.81 215.40
310.83 372.99

4359.40
236.94
447.59

7.65

9.94

18.39

1607.35
0.00
5965.91
473.66
59.99
2390.28
646.80
235.39
36.96
3843.06
1567.82
9808.96
378.10
108.09

1687.72
22.61
6345.14
497.34
56.99
2509.79
743.81
588.33
204.45
4600.71
2231.45
10945.85
415.91
118.80

1856.49
50.00
6968.80
571.94
62.69
2635.28
781.01
773.03
475.24
5299.18
2674.84
12267.98
457.50
136.46

Mar '14

Mar '15E Mar '16EMar '17E

481.43

679.68

962.17 1119.93

-54.74
254.76
289.38

-50.00
262.95
297.85

-25.00 14.00
289.24 303.71
307.22 344.02

Less Direc tax

970.83
138.27

1190.49 1533.63 1781.66

169.49 230.84 279.98

Inc/Dec in WC
CF From Operating Activity

832.56
-121
711.56

1070.99 1327.79 1487.68

-164.49 65.74 102.46
906.51 1393.53 1590.14

Cash From Investing Activity

Purchase of Fixed Assets
Sale of fixed assets
purchase/sale of investments

-1289.82
86.4
9.27

-689.00 -950.00 -1200.00

69.12
34.56 17.28
12
14
15

Net Profit Before Tax after Extra

ordinary Item
Other Inc/ dec In operating
Income
Add . Deprecication
Interest

Fixed deposits with bank Realised11.46

Interest Received
6.41
Divdend Received
0.02
Net cash used in Investing
Activities
-1176.26
Cash flow from Financing
Activities
Proceeds from Equity Share &
Share Warrant
0
Proceeds from Debts
222.92
Finance cost
-336.52
Divdend paid
-25.47
Net Cash used in Financing
Activities
-139.07
Net Inc/Dec in cash and Cash
Equivalents
-603.77
Cash & cash Equivalents at the
Beginning
878.11
Exchange Differenc
-2.98
Cash & cash Equivalents at the
end of the Year
271.36

5
28.78
0.05

6
30.24
0.02

2
31.68
0.03

-574.05 -865.18 -1134.01

`
11.18
350
-297.85
-20.35

11.18
-250
-327.64
-20.35

11.18
83.33
-344.02
-21.92

42.98

-586.81 -271.43

375.44

-58.46

271.36
0

646.80 588.33
-2.11
0

646.80

588.33 773.03

184.70

Liquidity Ratios

Mar '14

Mar '15E

Mar '16E

Mar '17E

Market Price (As on 24.03.2015)

120.00

120.00

120.00

120.00

Common Equity Share (FV =1)

31.12

42.30

42.30

42.30

Market Capitalization + Reserve

7218.83

9605.76

10058.73

10806.15

Enterprise value

10570.46

11920.62

12866.47

13896.33

EBITDA

942.35

1225.22

1523.44

1767.42

EV/EBITDA

11.22

9.73

8.45

7.86

EPS

11.72

12.07

16.37

19.86

P/E Ratio

10.24

9.95

7.33

6.04

Book Value (Rs)

112.28

108.09

118.80

136.46

P/BV

1.07

1.11

1.01

0.88

DBFS
RESEARCH
March 2015
Sintex Industries

Business recovery cycle on track

SINTs business cycle is favorably poised with

improvement in macro outlook and likely uptick in
government and private spending in related
verticals.
The company will be a major beneficiary from
governments strong focus on wide range of
infrastructure and social improvement plans viz.
Education, Health care, Sanitation, Housing etc.
SINTs most consistent business segment Prefab
(20% sales mix and 27% CAGR in FY12-15) should
accelerate further with huge potential in public
and private spending in new set of social
initiatives viz. CSR, Swash Bharat Mission etc.
Revival in mass housing projects through better
clarity on government plan in upcoming union
budget should aid required drive to subdued
monolithic vertical
Automobile segment after a subnormal 3-4 years
should witness revival in both passenger and
commercial segments. This will drive growth in
domestic composites, while overseas business (25%
sales mix and 16% CAGR over FY12- 15) has been
gradually becoming consistent with stabilization
of recent acquisitions.
Our base case revenue/EBITDA CAGR over FY15-17E
is ~14%/16%, which has upside risk from (a) new
sources of revenue contribution in prefab segment
(v/s current assumption of 22% FY15-17), (b)
positive surprise from revival in monolithic
business from low base (v/s current assumption of
15% FY15-17).
Spinning project to start in 1QFY16 phase wise
and in optimum capacity utilization (in FY17)
will contribute INR15b+ of revenue and 23-24%
EBITDA margin.
FCCB dilution concerns remain an impediment
albeit a significant conversion ~50%) is behind
with further dilution risk of ~13%.

Other Announcements
Sintex Industries Limited is
planning greenfield textiles
plant including spinning and
knitting at Pipavav.
The
company
is
planning
to
invest around Rs 5500 crore
for the new project which is
set to fully commission in
2017-18.
Spinning projects : The
trial
runs
for
100000
spindles is expected to
commissions by April 2015
and commercial production
should commence by September
2015. The balance 200000
spindles work is in full
swing to being production by
December 2015.

Valuation and views:

The stock trades at 6.04x FY17E EPS, 6.67x FY17E EV/EBITDA. We value SINT at 7.86x FY17E
EV/EBITDA (v/s 8.45 x FY16E earlier) on the back of improved business outlook. This translates
into fair value of INR152/share. However we also adjust for potential FCCB-linked dilution to
reach target price of INR148/share (26% upside). Maintain Buy.

Source: Company data DBFS Research

Source: Company data DBFS Research

DBFS
RESEARCH
March 2015
Sintex Industries

DBFS
RESEARCH
March 2015
Sintex Industries

DBFS
RESEARCH
March 2015
Sintex Industries

About the Company

Sintex Industries BSE: 502742 (Earlier known as The Bharat Vijay Mills Ltd) is the world largest
producer of plastic water tank.[4] It is also Asia's largest manufacturer of corduroy fabrics.[5] Sintex
has a strong presence in the European, American, African, and Asian markets including countries like
France, Germany and USA. It is primarily in manufacturing textiles & plastic products. Its
manufacturing includes a wide range of plastic products including prefabricated structures, industrial
custom moulding products, monolithic constructions and water storage tanks. In the textile segment, the
company focuses on niche segment specializing in men's shirting.

DBFS RESEARCH
March 2015
Sindex Industries

Disclaimer
Analyst Certification
I Saji John hereby certify that the views expressed in this research report accurately reflect my personal views about the subject
securities and issuers. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific
recommendations or view expressed in this research report.
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DBFS RESEARCH
March 2015
Sintex Industries

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