Buy Sintex India, target of 
300: Angel Broking
Bangalore: With the expectation in the demand revival in its domestic plastic segment, Angel Broking has recommended a buy rating on Sintex India with a price target of 
300 in its report dated October 12, 2009.
In its report, Angel Broking stated that at 248, Sintex India is currently trading at 9.0x of its FY2011E earnings and at 1.6x of its FY2011E book value. Historically, Sintex has traded at 13x of its one-year forward average (two, three and five-year) P/E, which makes the current valuations attractive. Moreover, its fundamentals have been strengthened with a well-capitalized balance sheet, strong revenue visibility (monolithic order book of Rs 1,400 crore), and a demand revival in its domestic plastic segment.
But, after the brokerage firm put buy rating, Sintex Industries disappointed the Street by posting lower-than-expected results for the quarter ended September 2009. Its stock is down 1.6 percent post results (since October 9 closing) as compared to the 3.6 percent rise in the Sensex. For the quarter, its consolidated revenues slipped, albeit marginally, by 2.5 percent, while adjusted net profits fell 26.3 percent on a YOY (year over year) basis.
Going ahead, things are seen improving. For instance, its building materials segment, which accounts for about 45 percent of consolidated revenues and includes pre-fabricated and monolithic products, grew marginally by 1.2 percent on a YOY basis, but registered 20 percent QOQ (Quarter Over Quarter) revenue growth, led by higher execution of monolithic structures. Currently, the company's monolithic business has an order book of about 1,500 crore, which provides good visibility.
While revenues and profits were down 5-10 percent in H1 (first half year) 2009-10, Sintex is expected to report flat to five percent growth in revenue and 8-10 percent rise in net profit for the full year. At 248, the stock is reasonably valued and is available at 9.5 times of its estimated earnings for 2009-10 and 7.7 times of 2010-11 earnings.
300 in its report dated October 12, 2009.
In its report, Angel Broking stated that at 248, Sintex India is currently trading at 9.0x of its FY2011E earnings and at 1.6x of its FY2011E book value. Historically, Sintex has traded at 13x of its one-year forward average (two, three and five-year) P/E, which makes the current valuations attractive. Moreover, its fundamentals have been strengthened with a well-capitalized balance sheet, strong revenue visibility (monolithic order book of Rs 1,400 crore), and a demand revival in its domestic plastic segment.
But, after the brokerage firm put buy rating, Sintex Industries disappointed the Street by posting lower-than-expected results for the quarter ended September 2009. Its stock is down 1.6 percent post results (since October 9 closing) as compared to the 3.6 percent rise in the Sensex. For the quarter, its consolidated revenues slipped, albeit marginally, by 2.5 percent, while adjusted net profits fell 26.3 percent on a YOY (year over year) basis.
Going ahead, things are seen improving. For instance, its building materials segment, which accounts for about 45 percent of consolidated revenues and includes pre-fabricated and monolithic products, grew marginally by 1.2 percent on a YOY basis, but registered 20 percent QOQ (Quarter Over Quarter) revenue growth, led by higher execution of monolithic structures. Currently, the company's monolithic business has an order book of about 1,500 crore, which provides good visibility.
While revenues and profits were down 5-10 percent in H1 (first half year) 2009-10, Sintex is expected to report flat to five percent growth in revenue and 8-10 percent rise in net profit for the full year. At 248, the stock is reasonably valued and is available at 9.5 times of its estimated earnings for 2009-10 and 7.7 times of 2010-11 earnings.
