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Building&Construction
PrefabricatedBuildings
Industrial
ElectricalEngineering
CustomMolding
Interiors
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2nd Feb,2011
B P EQUITIESSintex Industries Limited
Share Holding Pattern (%)
Sector Outlook Bullish
CMP (Rs) 96
Target Price (Rs) 122
BSE code 502742
NSE Symbol SINTEX
Bloomberg SINT IN
Reuters SINT.BO
Key Data
Nifty 5,416
52WeekH/L(Rs) 195/58.7
O/s Shares (mn) 272.99
Market Cap (Rs mn) 26,153
Average volume
3 months 71,47,890
6 months 46,09,633
1 year 30,74,823
Stock
Face Value (Rs) 1.00
Relative Price Chart
Research Analyst
Jinit Mehta
022-61596408
Company Description
The Sintex group is one of the leading providers of plastics and niche textile-related
products in India. With global footprints spanning 9 countries, Sintex has a strong presence in the
European, American, African, and Asian markets including countries like France, Germany and USA.In the textile division, the company manufactures high-value, yarn-dyed structured fabrics, corduroy
and items relating to home textiles. In the plastic division, the company manufactures the following:
storage solutions for water, oil and fuel; prefabricated structures, monolithic structures, industrial cus-
tom moulded products, consumer custom moulded products and interiors products.
Investment Rationale
Monolithic Business-Short term pain but long term gain
Sintexs monolithic business is witnessing a temporary slowdown due to government inefficiencies
regarding payment delays and inaction on passing of orders which has prompted the company to
moderate its execution of existing orders. However this will help the company to conserve its cash and
also reduce its working capital days as monolithic business is more working capital intensive than
capital intensive. We believe that Sintexs strong order book of ~Rs 30 bn which is to be executed
over the next two years and governments continued thrust on various low cost housing schemes forlow and middle income groups would provide this business strong growth momentum in the long run.
Robust growth in prefabrication business
The companys prefab business witnessed a decline in the last two years due to a slowdown in BT
shelter business (telecom). However we expect the company to achieve ~19% CAGR over FY11-
FY14E on the back of governments increased spending on social welfare programmes like National
Rural Health Mission and Sarva Shiksha Abhiyan which are the key growth drivers for this business.
Sintex enjoys high margins (~18-20%) in this business and we believe with utilizations expected to
reach optimum levels in FY13 the company would be able to sustain ~19% margins going forward.
Custom Mouldings to benefit from synergies due to foreign acquisit ions
The companys custom moulding business grew at 26% CAGR over FY08-FY11 as the use of com-
posites in place of metals grew substantially. The company has increased its geographical presenceand tapped new markets and clients via its overseas subsidiaries which has helped augment its reve-
nues and margins. We believe that as more processes are transferred to India and as more compos-
ites from India are supplied overseas synergies would be achieved which would help expand margins
going forward.
Valuation & Outlook
The company currently is facing pressure due to slowdown in its monolithic and custom moulding
business, high working capital days and issues regarding its FCCB repayment. However we believe
all these issues are short term in nature and the stock price has already factored in these issues. We
expect the companys revenues to grow at 9% CAGR on a conservative basis. At CMP the stock is
trading at 6.3x FY13E P/E and 5.2x FY13E EV/EBITDA. We initiate coverage on Sintex Industries Ltd
with a BUY rating and have arrived at target price of Rs 122 which implies ~27% upside from the
current levels. We have valued the stock at 8x FY13E EPS which is ~33% discount to its long termaverage P/E. (We had issued a pre-initiating coverage report on 19th J an 2012 when price was Rs 73
with a target price of Rs 95)
Diversified | Initiating Coverage 15th February 2012
Buy
BUY HOLD SELL
>15% -5% to 15%
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Sintex Industries Limited Initiating Coverage
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BP Equ i t ies repor ts a re a lso ava i lab le on Bloomberg [BPEP ]
Investment rationale
Monoli thic Business (~30% FY11 revenues) - Short term pain but long term gain
Savings in cost and time
Monolithic Construction is used in low cost mass housing solutions like slum rehabilitation, J anta hous-
ing and low & middle income group houses. The construction method involves filling the hollow plastic
frame work with concrete at the site. Under Monolithic, the time taken to cast an entire floor is ~7days
as compared to 20 days taken under the conventional brick and mortar method. Apart from saving
substantial time, cost under monolithic is also 8-10% less than the traditional method. These benefits
have encouraged various housing boards to implement monolithic construction for its housing projects
due to which 90% of Sintexs order book consists of government orders.
Higher EBITDA margins compared to peers
Sintex has pioneered the monolithic construction business in India and currently is the leader in this
business having an order book of Rs 30 bn and enjoys EBITDA margins higher than any of its com-
petitors in this space. The company enjoys ~18-20% margins compared to that of its competitors who
on average enjoy 10-12% margins primarily due to the fact that Sintex uses plastic formwork com-
pared to aluminium formwork used by its competitors like L&T, Shapoorji Pallonji and BE BIllimora.
Sintexs cost of manufacturing plastic formwork is lower as it manufactures the plastic in-house and is
able to recycle and use them again. Also as the company is an experienced player with superior tech-
nology, it is able to execute large scale projects, thus enabling it to enjoy higher margins on the back
of better economies of scale. Efficiencies comes in executing large order size rather than constructing
single buildings in this business. Average revenue per site for the company is Rs 750 mn now as com-
pared to Rs 350-500 mn earlier.
Working capital intensive
Monolithic construction is more working capital intensive than capital intensive in nature. For Rs 1,000
mn monolithic order, Rs 400-450 mn would be working capital requirement whereas only Rs 150 mn
would be the capital expenditure requirement due to which smaller players find it difficult to compete
with Sintex Industries which being an experienced and premier player has the expertise to execute
large working capital intensive orders.
Source: Company Presentation
MonolithicConstruction
Market Opputunity:
Rs 15,000 bn
Growth Drivers:
1) Higher spending onmass housing
2) Participation with privatesector
3) Huge shortage (>50mnhouses)
4) Decongestion of cities
5) Slum rehabilitation
6) Owning house than
renting (easy finance)
Competitive Advantage:
1) Fast implementation
2) Innovative and costcompetitive
3) Lean and Meanorganisation with leadtime advantages
Stategy:
1) Building executioncapabilities
2) Bidding for largerprojects
3) J oint developer model
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Sintex Industries Limited Initiating Coverage
Inst i t u t io na l Research BP Equ i t ies Pvt . L im i ted (www.bpwea l th .com) 15 /2 /2012 4
BP Equ i t ies repor ts a re a lso ava i lab le on Bloomberg [BPEP ]
Delay tactics used by government hurting Monolithi c Business currently
The companys monolithic business is currently facing a slow down due to governments inactivity on
growth oriented projects. As mentioned earlier, 90% of this business order book consists of govern-
ment orders due to which any slowdown in governments activity directly affects Sintexs business.
Monolithic segment is currently facing headwinds due to delay in payments by the government, delay
in site clearances and deferring of orders.
Increase in the working capital cycle
The sluggish government activities has led to execution delays in Sintexs monolithic business. Being
a working capital intensive business, the average working capital days in this segment has remained
high due to the previously mentioned government delays faced by the company. This has prompted
the company to moderate its execution of orders to conserve more cash which would help the com-
pany improve its working cycle.
Long-term prospect looking good for monolith ic business
Although the monolithic business is facing a slow down currently, the long term potential for this busi-
ness is huge on the back of continued thrust in government spending on various social infrastructure
programmes. Programmes such as Indira Awas Yojana, J NNURM and Rajiv Awas Yojana focuses on
building low cost housing & slum rehabilitation which provides Sintex Industries with huge business
opportunities. Going forward, the government is expected to increase its spend on such programmes
through its 12th Five Year Plan (2012-13 to 2016-17).
Rs bn Indira AwasYojana JNNURM(BSUP) JNNURM(IHSDP) Rajiv Awas Yo-jana
FY 2006 28 3
FY 2007 26 10 5
FY 2008 40 15 5
FY 2009 54 19 6
FY 2010 89 23 11 2
FY 2011 100 29 12 13
FY 2012 100 13
Figure: Governments capex on social infrastructure p rogrammes
Source: www.indiabudget.nic.in, BP Equities Research
Figure: Monolithic Construction Order Book
Source: BP Equities Research
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12
Monolithic Order Book (Rs mn)
Govts spend on social infra-
structure programmes is ex-
pected to increase considerably
in 12th Five year plan (2012-13
to 2016-17)
Current order book is ~Rs 30 bn
and the company has guided to
a slowdown in execution of or-
ders to conserve cash and im-
prove working capital
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Sintex Industries Limited Initiating Coverage
Inst i t u t io na l Research BP Equ i t ies Pvt . L im i ted (www.bpwea l th .com) 15 /2 /2012 5
BP Equ i t ies repor ts a re a lso ava i lab le on Bloomberg [BPEP ]
Monolithic Business: Revenue growth
The companys monolithic business has grew at 85.2% CAGR from FY08-FY11 to Rs 13,350 mn
(~30% of FY11 revenues) on the back of continuous spend by the government on various social infra-
structure programmes. However we expect the company to achieve 2.3% CAGR in its revenues over
FY11-FY14E due to considerable slowdown in its order book execution and delay in payments by the
government.
Monolithic Business: EBITDA marginsThis segment enjoys high EBITDA margins due to its superior technology and manufacturing capabili-
ties. However going forward we expect the margins to decline as competition in this business is ex-
pected to increase due to low entry barriers in this business due to which we believe the margins to
decrease by 400 bps over FY11 to FY14 to ~16%.
Figure: Monolithic Business Revenue Growth
Source: BP Equities Research
115%
59%
86%
-10%
8% 10%
-20%
0%
20%
40%
60%
80%
100%
120%
0
2,500
5,000
7,500
10,000
12,500
15,000
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Monoli thic Revenues (Rs mn) Y-o-Y Growth
Figure: Monolithic Business EBITDA Margin
Source: BP Equities Research
19.0% 18.5% 19.0%
20.0%
17.3% 17.0%16.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
500
1,000
1,500
2,000
2,500
3,000
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
EBITDA (Rs mn) EBITDA Marg in
We expect the company to postnegative growth of 10% in FY12
due to slowdown in order exe-
cution and delay in payments.
We expect decrease in the
EBITDA margins to 16-17% from
19-20% earlier going fo rward
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Sintex Industries Limited Initiating Coverage
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BP Equ i t ies repor ts a re a lso ava i lab le on Bloomberg [BPEP ]
Robust g rowth in prefabrication business (~14.5% FY11 revenues)
Considerable saving in execution time
Prefabs are used worldwide and are common in housing and construction and have been revolutioniz-
ing construction methods in India. They can be used for building temporary as well as permanentresidences, setting up of schools, dispensaries, orphanages, police stations, defense shelters and
telecom BT shelters. Prefabs are structures which are made out of plastic, steel and concrete in the
factory and are than transported to the sites where they are assembled. Prefab construction results in
10-15% cost saving and 60-70% saving in execution time compared to conventional construction
methods. Typically a prefabrication structure can be put together in ~10 days starting from the fabrica-
tion process in the manufacturing plant to completion of the installation work at the site.
Large geographical presence
The companys prefab business was not initially accepted by the state governments and the company
was finding it difficult to get approvals for its projects. However after the Bhuj earthquake in 2001, Sin-
tex built lot of shelters and clinics within a short period of time which helped the companys product
and technology being accepted due to which the company started receiving new orders. Currently thecompany has approvals from 17 state governments and covers~65 to 70% of Indias geography due to
its six state-of-the-art manufacturing plants across India with each plant catering to ~1,500 km radius
geographical area. The company may set up a manufacturing plant in the North-Eastern part of India
considering the robust demand being witnessed for prefab from that region. Currently ~70% of the
companys prefab business comes from the government and the balance 30% from private players
with private players generally placing orders to construct cold-storage chains, agricultural sheds and
bunk houses.
Maintaining high EBITDA margins
The company has been performing well in this segment and has been delivering healthy EBITDA mar-
gins of 18-20% consistently over the past few years. The key to deliver healthy margins in this busi-
ness is the speedy execution of the project as the construction site is usually located in far off remoteregions. Logistics, raw materials and kit making constitute 25%, 25-30% and 25% of total cost respec-
tively. Since logistics cost forms a major part of the total cost it is important for the team to take all the
necessary tools & equipment and components required for installation before leaving the factory. If
any necessary component is left behind, it becomes unviable for the team to return to the factory to
get that component considering the high logistics cost involved due to which the company assures that
all required items are taken along with the team before leaving the factory.
Existing Prefab Plant Location Approved States
Baddi (Himachal Pradesh)
Delhi
PunjabHaryana
Himachal Pradesh
Uttar Pradesh
Kalol (Gujarat)Gujarat
Rajasthan
Kolkata (West Bengal)
West Bengal
Assam
Bihar
Nagpur (Maharashtra)
Maharashtra
Madhya Pradesh
Chhattisgarh
Salem (Tamil Nadu) Tamil NaduKerala
Dadri (Uttar Pradesh)Uttar Pradesh
Bihar
Figure: Companys prefab plants location and serving of states
Source: Company, BP Equities Research
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Robust growth
Companys prefab business has grown 14.6% over FY10 to FY11 even though there has been a slow-
down in the BT shelter business. The key demand drivers for the companys prefab business is gov-
ernments spend on social infrastructure programmes like Sarva Shiksha Abihyan and National Rural
Health Mission which has provided Sintex ample business opportunities in the education, healthcare
and sanitation space. We expect the government to increase its spend on such social infrastructure
programmes in its 12th Five Year Plan (2012-13 to 2016-17) on the back of which we expect Sintex to
post robust growth of 20% CAGR over FY12E-FY14E. Also Sintexs prefab division is currently better
positioned than its monolithic business which is facing delays in order approval and release of pay-
ments. The prefab business has a smaller ticket size of ~Rs 1 mn compared to monolithics average
ticket size of ~Rs 75mn due to which the likelihood of payment delay in the prefab business is signifi-
cantly less. The average execution time of project is also considerably less in prefab compared to
monolithic business (~10 days in prefab) due to which postponement/cancellation of order is less in
the prefab business.
Figure: Governments capex on social infrastructure p rogrammes
Source: www.indiabudget.nic.in, BP Equities Research
72
100107
131 131
150
210
66
82100
121
141154
178
0
50
100
150
200
250
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Sarva Shiksha Abhiyan (Rs bn) National Rural Health Mission (Rs bn)
Source: Company Presentation
PrefabBusiness
Market Opputunity:Rs 100 bn
Growth Drivers:
1) Increasing Govt.spending on rural infra,education, health,sanitation, orphanages,police stations, armybarracks, agri-sheds, coldchain solution and workershelters
2) Higher infra spending willspur demand
Competitive Advantage:
1) Product portfolio
2) Presence acrosscountry gives leadinglogistics edge
3) Lead time advantage
4) Multiple solutions,multiple market segments
Stategy:
1) New products inwarehousing andagrisheds
2) Expansion in remainingstates
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BP Equ i t ies repor ts a re a lso ava i lab le on Bloomberg [BPEP ]
Figure: Prefab Business Revenue Growth
Source: Company, BP Equities Research
1.2%
-15.7%
14.6%15.5%
20.0% 20.0%
-20%
-10%
0%
10%
20%
30%
0
2,000
4,000
6,000
8,000
10,000
12,000
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Prefab Revenues (Rs mn) Y-o-Y Growth
Figure: Prefab Business EBITDA Margin
Source: Company, BP Equities Research
18.7%19.7%
16.6%
20.5%19.0%
19.0%
18.0%
0%
5%
10%
15%
20%
25%
0
500
1,000
1,500
2,000
2,500
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
EBITDA (Rs mn) EBITDA Margin
Companys prefab business is
expected to show robust
growth going forward and we
believe it would grow at 18.5%
CAGR over FY11-FY14E
The prefab business, we be-
lieve, might face some pressure
on its margins due to which we
expect its margins to decrease
by 250 bps by FY14E.
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Custom Mouldings to benefit from synergies (~41% FY11 revenues)
Long term replacement for metals
The custom moulding business manufactures composites which is potentially seen as a long term
replacement for metals. Composites are made by combining two or more different materials to manu-
facture a new material, for e.g. a mixture of polymer and high end epoxy can produce fiberglass which
is an immensely versatile material combining its light weight with an inherent strength to provide a
weather resistant finish. Fiberglass finds its applications in various products and industries
such as aviation industry, building of boats and spots car bodies, telecommunications industry,
storage tanks etc.
Key benefits o f composi tes
Lightweight yet strong
Higher strength
Leading p layer in India
The raw materials cost of composites are 15-20% costlier than metal prices. However costs
are driven down as application and volumes grow since 60-65% of total cost is raw material
cost whereas the rest is employee cost. Sintex is a leading player in the custom moulding seg-
ment in India with manufacturing plants across the country and having presence in various
segments.
Market Segments
Automotive
Electrical
Aerospace & Defense
Medical
Mass Transit
Margin expansion due to synergies
The company, in the past few years has grown inorganically having made acquisitions in India
and abroad to move up the product value chain and gain access to new clients and superior
technology. It acquired six companies in OECD countries thereby having presence in four con-
tinents and eight countries with low cost manufacturing bases. The acquisitions would help the
company expand its margins due to deployment of superior technology at India and outsourc-
ing by overseas subsidiaries for low cost manufacturing in India.
Industrial Trucks & Tractors
Construction
Recreation
Wind Energy
Doormatics & House hold products
Corrosion and chemical resistance
Elastic and non conducive
Figure: Custom Moulding Business-Acquisition History
Source: Company, BP Equities Research
Company Name Country Acquisition Date Custom Moulding Business Acquisition Price FY 11 Revenues
Wausaukee Composites USA J un-07Auto & medical imaging, Mass
transit, etc.USD 20.5 mn INR 1,700 mn
Nief Plastics S.A. (further acquired AIPand Simop/Simco)
France Jun-07Automotive, electrical, aeronautics
and defence sectorEUR 40.2 mn INR 9,470 mn
Bright Autoplast Pvt Ltd India Sep-07 Automotive sector INR 1489.0 mn INR 2,730 mn
Nero Plastic USA Dec-07Structural plastic and composite
componentsUSD 4.7 mn
Merged with Wausau-kee
Geiger Technik Germany J ul-08Plastic products for the automotive
industryUSD 10 mn Written Off
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Source: Company Presentation
Main Processes Secondary Processes
Rotational molding (multi layer, Insert molding) Tooling
PVC extrusion Design and development
Injection molding of thermoplastics (gas assisted, In mould inserts) J igs and Fixtures
Blow molding Insitu Foaming
Singe/twin sheet thermoforming PU painting and others
Custom molding and custom extrusion Powder coating
Injection molding of thermosets Silk screening
Sheet molding compounds Pad printing
Pultrusion Cosmetic improvement (Decorations)
Resin transfer molding Laser etchingChop-hoop-winding Ultrasonic welding
Light RTM and vacuum bag infusion molding Plastic and metal welding
Liquid composite molding Plastic fabrication
Open mold (Hand Lay-up) Metal fabrication
Reaction injection molding Sheet metal cutting, bending, sheering
Soft-touch Press breaking
Continuous/Discontinuous panels Roll forming
Robotic water jet cutting and bonding
Assembly and sub-component assemblies
Figure: Custom Mouldings Main and Secondary Processes
Source: Company, BP Equities Research
CustomMoulding
Market Opputunity:
~$ 15 bn Global
Growth Drivers:
1) Higher usage ofcomposites as replacementto metals
2) New verticals
3) Weight reduction for fuelefficciency
4) Light weight yet strong
5) Resilent weather ability
6) Chemically inert and highelectrical inulation
Competitive Advantage:
1) Technology
2) Penetration in OEMs
3) Fortune 500 customers
4) Foot print across 4
continents5) Low cost manufacturingbases
Stategy:
1) Collaboration amongsubsidiaries
2) Increasing client mining
3) Acquired tecnology and
clients through acquisition4) Labor arbitrage andsynergy drives
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Domestic Custom Moulding Business (~9% FY11 revenues)
Sintexs domestic custom moulding business caters to the electrical equipment, automotive and
household space and manufactures tamper-proof SMC Meter Boxes, cross arms for power transmis-
sion grids, polymeric insulators etc. This segment has grown at 7.4% CAGR over FY09-FY11 and weexpect the segment to grow at~12% CAGR over FY11-FY14E on the back of growing demand from
the electrical and automotive industry. We believe that the various government initiatives undertaken
to provide electricity to rural India and continued impressive growth in the automobile sector would
drive the demand for the companys domestic composites products going forward. Sintex has been
able to achieve margins in the range of 22-24% in the past few years in this segment and we expect
the company to maintain margins at 21-23% going forward.
2.0%
13.0%
15.0%
10.0% 10.0%
0%
3%
6%
9%
12%
15%
18%
0
1,000
2,000
3,000
4,000
5,000
6,000
FY09 FY10 FY11 FY12E FY13E FY14E
Revenues (Rs mn) Revenue Growth
Figure: Domestic Custom Moulding Business Revenue Growth
Source: Company, BP Equities Research
22.0%
23.0%
24.3%
21.0%
22.5%
23.5%
18.0%
19.5%
21.0%
22.5%
24.0%
25.5%
0
250
500
750
1,000
1,250
1,500
FY09 FY10 FY11 FY12E FY13E FY14E
EBITDA (Rs mn) EBITDA Margin
Figure: Domestic Custom Moulding Business EBITDA Margins
Source: Company, BP Equities Research
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Acquis it ion of Bright Brothers (~6.2% FY11 revenues)
Sintex acquired Bright Brothers in September 2007 for Rs 1,489 mn to enter the domestic automotive
segment. The company today is a Full Solution Supplier and has been offering innovative solutions to
its customers for the past 34 years. The company employs range of plastic technologies like Injectionmoulding with gas assisted PEP & Sequential flow technology , Blow moulding , Vacuum forming , PU
foaming , Vibration welding , Ultrasonic welding , PU painting and sub-assemblies. The company has
six manufacturing plants across India and manufactures products like Instrument panels, Dash boards,
Pillar Trims, Radiator Grills, Air vents, Grab handles and under the hood components. Bright Brothers
has grown at ~46.6% CAGR over FY09-FY11 to post revenues of Rs 2,730 mn in FY11 and we have
estimated a very conservative 12.5% CAGR over FY11-FY14E as we expect a slowdown in the In-
dian automobile sector. We expect the EBITDA margins to remain in the 14-16% range going forward.
Sintex believed that it would benefit from synergies between Nief (acquired in J une 2007) and Bright
and would cater to clients like Maruti, Hyundai, Tata Motors, M&M, General Motors, Ashok Leyland,
Nissan, Force Motors, TVS, Honda etc.
50.4%
42.9%
10.0%12.5%
15.0%
0%
10%
20%
30%
40%
50%
60%
0
800
1,600
2,400
3,200
4,000
FY09 FY10 FY11 FY12E FY13E FY14E
Bright 's Revenues (Rs mn) Revenue Grow th
Figure: Bright Brothers Revenue Growth
Source: Company, BP Equities Research
Source: Company, BP Equities Research
16.0%
14.0%
16.1%
14.0%
14.5%
15.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
0
150
300
450
600
750
FY09 FY10 FY11 FY12E FY13E FY14E
EBITDA (Rs mn) EBITDA Margin
Figure: Bright Brothers EBITDA Margins
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Acquis it ion of Nief Plast ics (~22% FY11 revenues)
Sintex acquired Nief Plastics in J une 2007 for EUR 34.77 mn. Nief currently has 9 plants in France, 2
in Eastern Europe (Hungary and Slovakia) and 2 in Northern Africa (Tunisia and Morocco) and deliver
customers in the fields of automotive, electrical/electromechanical industry, aeronautics/defense,household appliances, medical, construction, sport and leisure etc with a strong client base like Schei-
der, Faurecia, Siemens, Legrand, ABB, Areva and Alstom. Nief has provided Sintex access to superior
manufacturing technology and strong client base and has helped the company gain a foothold in the
European plastic components market due to its competitive pricing and technical qualifications. Sintex
has also crated a strong presence in the automotive and electrical composite market due to the syner-
gies achieved between Nief Plastics and Bright Autoplast. Niefs revenues has been growing at 16.4%
CAGR over FY09-FY11 and we expect the company to grow at 9.5% CAGR over FY11-FY14E. Nief
has been achieving ~12% EBITDA margins in this business and we expect the margins to remain in
the range of 10-11% going forward.
Figure: Nief Plastics Revenue Growth
10.1%
23.2%
8.5%10.0% 10.0%
0%
5%
10%
15%
20%
25%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY09 FY10 FY11 FY12E FY13E FY14E
Nief Revenues (Rs mn) Revenue Growth
Source: Company, BP Equities Research
11.5%
12.0% 12.0%
10.0%
10.5%
11.0%
9.0%
9.5%
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
0
250
500
750
1,000
1,250
1,500
FY09 FY10 FY11 FY12E FY13E FY14E
EBITDA (Rs mn) EBITDA Margin
Figure: Nief Plastic s EBITDA Margins
Source: Company, BP Equities Research
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Acquis it ion of Wausaukee Composites Inc (~3.8% FY11 revenues)
Sintex acquired Wausaukee Composites Inc in J une 2007 for USD 20.5 mn. The acquisition helped
Sintex to enter the US composite market and gain access to a number of Fortune 500 companies.
Wausaukee is based in Wisconsin (USA) and is a leading manufacturer of highly-engineered compos-ite components for Original Equipment Manufacturer (OEM) customers in the Construction Equipment,
Agricultural Equipment, Mass Transportation, Wind Energy, Medical and Security Imaging, Commer-
cial Site Furnishing, Therapeutic Systems, Corrosion-Resistant Materials Handling and recreation In-
dustries. The company has total four manufacturing plants located in the Midwestern United States
and provides composite plastic and fiberglass components to more than 35 OEM customers globally,
producing more than 100,000 units annually. Wausaukee acquired Nero P lastics in December 2007
for USD 4.7 mn and generated revenues of Rs 603.4 mn in CY10. Nero Plastics is a custom moulder
of low and medium volume and structural plastic and composite components. Wausaukees revenues
had a negative CAGR of ~7.5% over FY09-FY11 and is expected to grow at 6.6% CAGR over FY11-
FY14E with EBITDA margins in the range of 9-10%.
Figure: Wausaukees Revenue Growth
Source: Company, BP Equities Research
-26.0%
15.7%
0.0%
10.0% 10.0%
-30%
-20%
-10%
0%
10%
20%
0
500
1,000
1,500
2,000
2,500
FY09 FY10 FY11 FY12E FY13E FY14E
Wausaukee's Revenues (Rs mn) Revenue Growth
Figure: Wausaukees EBITDA Margins
7.0%
10.0% 10.1%
9.0%9.5%
10.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
50
100
150
200
250
FY09 FY10 FY11 FY12E FY13E FY14E
EBITDA (Rs mn) EBITDA Marg in
Source: Company, BP Equities Research
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Figure: Custom Moulding Business-Segmental break-up of revenues and EBITDA
Source: Company, BP Equities Research
Figure: Custom Mould ing FY11 Revenue Mix
Source: Company, BP Equities Research
42.1%
6.2%15.8%
35.0%
Nief Plastics Wausau kee Com po sit es
Bright Autoplas t L td Domest ic Custom Moulding
52.6%
8.5%
16.0%
22.9%
Nief Plast ics Wau sau kee Co mp osit es
Bright Autoplast L td Domest ic Custom Moulding
Source: Company, BP Equities Research
Figure: Custom Mould ing FY11 EBITDA Mix
Rs mn FY09 FY10 FY11 FY12E FY13E FY14ENief Plastics
Revenue 7,183 7,906 9,740 10,568 11,625 12,787
Revenue Growth (%) 105.8% 10.1% 23.2% 8.5% 10.0% 10.0%
EBITDA 826 949 1,169 1,057 1,221 1,407
EBITDA Margin (%) 11.5% 12.0% 12.0% 10.0% 10.5% 11.0%
Wausaukee Compos ites
Revenue 1,987 1,469 1,700 1,700 1,870 2,057
Revenue Growth (%) 94.8% -26.0% 15.7% 0.0% 10.0% 10.0%
EBITDA 139 147 172 153 178 206
EBITDA Margin (%) 7.0% 10.0% 10.1% 9.0% 9.5% 10.0%
Bright Autoplast Ltd
Revenue 1,270 1,910 2,730 3,003 3,378 3,885
Revenue Growth (%) 217.5% 50.4% 42.9% 10.0% 12.5% 15.0%
EBITDA 203 267 440 420 490 583
EBITDA Margin (%) 16.0% 14.0% 16.1% 14.0% 14.5% 15.0%
Domestic Custom Moulding
Revenue 3,470 3,540 4,000 4,600 5,060 5,566
Revenue Growth (%) -15.8% 2.0% 13.0% 15.0% 10.0% 10.0%
EBITDA 763 814 972 966 1,139 1,308
EBITDA Margin (%) 22.0% 23.0% 24.3% 21.0% 22.5% 23.5%
Total Custom Moulding
Revenue 13,910 14,825 18,170 19,871 21,933 24,295
Revenue Growth (%) 54.0% 6.6% 22.6% 9.4% 10.4% 10.8%
EBITDA 1,932 2,177 2,752 2,596 3,027 3,503
EBITDA Margin (%) 13.9% 14.7% 15.1% 13.1% 13.8% 14.4%
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Textile Business (~9.9% FY11 revenues)
Sintexs textile division is a profitable and high-margin segment operating under the brand name of
BVM. The division is the largest producer of corduroy and structured fabric in India and specializes in
distinctive products catering to the niche upper segment of fashion industry. Sintex operates a state-of-the-art composite mill at Kalol in Gujarat and it is the only organized corduroy mill in India which is
into continuous fabric processing. The company manufactures unique fabrics with new designs (nearly
50,000 per annum) and finishes which cannot be duplicated and has the capability to deliver designs
with variety of weaving including Dobby, J acquard and double beam etc. Sintex has alliances with
various European design houses and a UK bases textile marketing company which helps the company
gain traction in its business. The company provides fabrics to reputed brands like Arrow and Van
Heusen and indirectly sells fabrics to global retail majors like Armani, Hugo Boss, Diesel, Burberry,
DKNY, S.Oliver, Zara, Mexx, Meggimo Dotti, Banana Republic etc. The company focuses on high-end
structured dyed yarn fabrics considering its niche market positioning and provides fibre to fabric facili-
ties. The textile division can be segregated into 1) High end mens structured shirting fabrics and 2)
Yarn-dyed corduroy and ultima cotton yarn based corduroy. The textile divisions revenue has grown
at 9% CAGR over FY08-FY11 and we expect it to grow at 7% CAGR over FY11-FY14E. Sintexs tex-
tile business is a high margin business and we expect the company to achieve EBITDA margins in the
range of 22-23% going forward.
Storage tanks business (~4.5%vFY11 revenues)
Sintex has become synonymous with water storage tanks since the time it began to manufacture tanks
in 1975. The company manufactures both overhead and underground storage tanks and is the market
leader in this segment. In the initial years there was great demand for this product as customers pre-
ferred this over the traditional brick and mortar tanks and there were few competitors. Currently this
business contributes ~4.5% to the total business and enjoys EBITDA margins in the range of 11%.
The business has grown at 18.5% CAGR over FY08-FY11 and we expect it to grow at 12.3% CAGR
over FY11-FY14E with EBITDA margins in the range of 8-10%.
Figure: Textile Divisions Revenue & EBITDA Growth
Source: Company, BP Equities Research
-6.5%
27.0%
7.0% 7.0% 7.0%
29.0%
20.0% 24.0%
23.0% 22.5%22.0%
-10%
0%
10%
20%
30%
40%
0
1,000
2,000
3,000
4,000
5,000
6,000
FY09 FY10 FY11 FY12E FY13E FY14E
Textile Revenues (Rs mn) EBITDA (Rs mn)
Reven ue Grow th EBITDA Marg in
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Financial Analysis
Sintexs Revenue Growth
The companys net sales has grown at ~25% CAGR over FY08-FY11 to Rs 44,344 mn on the back of
85.2% CAGR in monolithic business and 26.2% CAGR in custom moulding business during the same
period. We expect the company to grow at 9% CAGR over FY11-FY14E on the back of 18.5% CAGR
in prefab business and 10.2% CAGR in custom moulding business. We believe monolithic business to
witness a considerable slowdown and expect its revenue contribution to fall from 30% in FY11 to 25%
in FY14 on the back of muted revenue growth of 2.3% CAGR over FY11-FY14E.
Sintexs EBITDA Margins
We expect the companys EBITDA margin to decline to 15% by FY14 from 18.2% in FY11 due to de-
clining trend in margins of monolithic and prefab business. The companys net profit margins are also
expected to show a sharp decline in FY12 to 6.4%. However we believe it to improve in FY13 and
FY14 on account of lower interest outgo and achieve 8% and 9.6% respectively.
36.5%
5.9%
35.1%
4.6%
10.2%11.8%
0.00%
10.00%
20.00%
30.00%
40.00%
-
10,000
20,000
30,000
40,000
50,000
60,000
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Revenues (Rs m n) Grow th %
Figure: Companys Consolidated Revenue Growth
Source: Company, BP Equities Research
17.7% 16.6% 16.2%18.2%
16.1%15.5%
15.0%
10.0%10.4%
9.9% 10.3%
6.4%
8.0%9.6%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
-
1,500
3,000
4,500
6,000
7,500
9,000
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
EB ITDA (Rs m n) PA T (Rs m n) EB ITDA Marg in (%) NPM (%)
Figure: Companys Consolidated EBITDA and Profit Margins
Source: Company, BP Equities Research
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Sintexs FCCB analysis
Sintex had raised USD 225 mn of FCCBs in FY08 to finance its overseas acquisitions. The conversion
price is set at Rs 246.5 and looking at the current market price it seems highly improbable that the
FCCBs would be converted due to which the company would have to redeem the FCCBs. The com-pany has to redeem USD 290 mn of FCCBs including the premium payable. It has USD 110 mn of
FCCBs lying unutilized in an escrow account outside India and the balance the company is going to
raise via ECB of USD 110 mn and raise USD 70mn from its subsidiaries and the holding company to
redeem its FCCBs. The companys RoCE would improve after redemption of its FCCBs as there
would be reduction in capital employed (denominator) due to which we believe companys RoCE to
increase from 7.3% in FY12E to 9.1% in FY13E. We believe the company would generate enough free
cash flow in FY13E to redeem its FCCBs comfortably.
20.9%19.9%
17.9%
21.1%
11.8%
14.2%16.4%
11.2%10.0%
8.7%10.5%
7.3%9.1%
12.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Ro E (%) Ro CE (%)
Figure: Companys Consolidated RoE and RoCE
Source: Company, BP Equities Research
(7,708)
(5,802)(4,484)
433
(494)
3,7344,729
(8,000)
(5,000)
(2,000)
1,000
4,000
7,000
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Free Cash Flow (Rs mn)
Figure: Company s Free Cash Flow
Source: Company, BP Equities Research
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Source: Company, BP Equities Research
Figure: Assumptions-Revenue Growth and EBITDA Margins for Subsidiaries and Business Segments
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Monolithics
Revenues (Rs mn) 2,100 4,520 7,190 13,350 12,015 12,976 14,274Growth % 115.2% 59.1% 85.7% -10.0% 8.0% 10.0%
EBITDA (Rs mn) 400 836 1,366 2,670 2,073 2,206 2,284
EBITDA Margin (%) 19.0% 18.5% 19.0% 20.0% 17.3% 17.0% 16.0%
% of Revenues 9.2% 15.0% 22.0% 30.1% 25.9% 25.2% 24.8%
Prefabs (excluding Zep Infratech)
Revenues (Rs mn) 5,340 5,580 4,300 5,294 6,115 7,337 8,805
Growth % 4.5% -22.9% 23.1% 15.5% 20.0% 20.0%
EBITDA (Rs mn) 1,080 1,116 774 1,088 1,162 1,394 1,585
EBITDA Margin (%) 20.2% 20.0% 18.0% 20.6% 19.0% 19.0% 18.0%
% of Revenues 23.5% 18.5% 13.1% 11.9% 13.2% 14.3% 15.3%
Zep Infratech
Revenues (Rs mn) 1,270 1,110 1,340 1,170 1,351 1,622 1,946
Growth % -12.6% 20.7% -12.7% 15.5% 20.0% 20.0%
EBITDA (Rs mn) 150 200 161 234 257 308 350
EBITDA Margin (%) 11.8% 18.0% 12.0% 20.0% 19.0% 19.0% 18.0%
% of Revenues 5.6% 3.7% 4.1% 2.6% 2.9% 3.2% 3.4%
Custom Moulding Domestic
Revenues (Rs mn) 4,120 3,470 3,540 4,000 4,600 5,060 5,566
Growth % -15.8% 2.0% 13.0% 15.0% 10.0% 10.0%
EBITDA (Rs mn) 1,090 763 814 972 966 1,139 1,308
EBITDA Margin (%) 26.5% 22.0% 23.0% 24.3% 21.0% 22.5% 23.5%
% of Revenues 18.1% 11.5% 10.8% 9.0% 9.9% 9.8% 9.7%
Nief Plastics
Revenues (Rs mn) 3,490 7,183 7,906 9,740 10,568 11,625 12,787
Growth % 105.8% 10.1% 23.2% 8.5% 10.0% 10.0%
EBITDA (Rs mn) 314 826 949 1,169 1,057 1,221 1,407
EBITDA Margin (%) 9.0% 11.5% 12.0% 12.0% 10.0% 10.5% 11.0%% of Revenues 15.3% 23.8% 24.2% 22.0% 22.8% 22.6% 22.2%
Wausaukee Compos ites
Revenues (Rs mn) 1,020 1,987 1,469 1,700 1,700 1,870 2,057
Growth % 94.8% -26.0% 15.7% 0.0% 10.0% 10.0%
EBITDA (Rs mn) 31 139 147 172 153 178 206
EBITDA Margin (%) 3.0% 7.0% 10.0% 10.1% 9.0% 9.5% 10.0%
% of Revenues 4.5% 6.6% 4.5% 3.8% 3.7% 3.6% 3.6%
Bright Autoplast
Revenues (Rs mn) 400 1,270 1,910 2,730 3,003 3,378 3,885
Growth % 217.5% 50.4% 42.9% 10.0% 12.5% 15.0%
EBITDA (Rs mn) 80 203 267 440 420 490 583
EBITDA Margin (%) 20.0% 16.0% 14.0% 16.1% 14.0% 14.5% 15.0%
% of Revenues 1.8% 4.2% 5.8% 6.2% 6.5% 6.6% 6.8%Tanks
Revenues (Rs mn) 1,560 1,410 1,620 1,980 2,317 2,548 2,803
Growth % -9.6% 14.9% 22.2% 17.0% 10.0% 10.0%
EBITDA (Rs mn) 140 85 162 257 232 229 224
EBITDA Margin (%) 9.0% 6.0% 10.0% 13.0% 10.0% 9.0% 8.0%
% of Revenues 6.9% 4.7% 5.0% 4.5% 5.0% 5.0% 4.9%
Textiles
Revenues (Rs mn) 3,440 3,680 3,440 4,370 4,676 5,003 5,353
Growth % 7.0% -6.5% 27.0% 7.0% 7.0% 7.0%
EBITDA (Rs mn) 963 1,067 688 1,049 1,075 1,126 1,178
EBITDA Margin (%) 28.0% 29.0% 20.0% 24.0% 23.0% 22.5% 22.0%
% of Revenues 15.1% 12.2% 10.5% 9.9% 10.1% 9.7% 9.3%
Total Consolidated Business
Revenues (Rs mn) 22,740 30,210 32,715 44,334 46,344 51,420 57,477
Growth % 32.8% 8.3% 35.5% 4.5% 11.0% 11.8%
EBITDA (Rs mn) 4,248 5,236 5,328 8,050 7,394 8,290 9,124
EBITDA Margin (%) 18.7% 17.3% 16.3% 18.2% 16.0% 16.1% 15.9%
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Company Overview
Sintex Industries Ltd is one of the leading providers of plastics and niche textile-related products in
India. Sintex has a global presence with its footprints spanning nine countries and having strong pres-
ence in the European, American, African and Asian markets.The company was established in 1931 and has pioneered innovative concepts in plastics and textile
sectors in India. The company has 36 manufacturing plants in India and abroad and manufacture vari-
ous products such as custom moulding products, prefabricated structures, monolithic construction,
FRP products, textile products and water storage tanks.
Management Team
Rahul A Patel - Managing Director - He holds a bachelors degree in communications and has
completed his MBA from USA. He has more than 24 years of experience in textile and plastics
Amit D Patel - Managing Director - He holds a bachelors degree in commerce and has com-
pleted his MT from USA. He has 18 years of experience in textiles, chemical and plastics.
S B Dangayach - Managing Director - He has a B.Sc (Hons) degree and has done his PGDBA
from IIM Ahmedabad. He has 3 decades of experience in plastics.
L.M. Rathod - Group CFO and CS - He is a graduate in commerce and law and has completed
his MBA and FCS. He has 2 decades of experience in corporate finance, company law and taxation.
Sunil Kanojia - Group President - He is a graduate in engineering and a MBA from IIM Ahmeda-
bad. He has 23 years of domestic and international experience across industries.
Source: Company Presentation
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Key Concerns
Government inaction affecting monolithic business
The companys monolithic business is facing execution slowdown and payment delays due to govern-
ment inaction in releasing payments and passing orders which is impacting Sintexs working capital as
monolithic business is a working capital intensive business. Further any slowdown in government ini-
tiatives on its social infrastructure spending would hurt the company as 90% of its monolithic order
book consists of government orders.
Slowdown in US and Europe economy
Sintexs overseas subsidiaries may face pressures on its revenue and margin front on the back of con-
tinuing slowdown in the global economy especially in the Euro zone.
Slowdown in automotive segmentThere has been a considerable hike in interest rates in India which has caused a slowdown in the
automobile sector in India during FY12 along with other factors. Sintexs domestic custom moulding
business is driven by the automobile segment (Bright Autoplast Ltd) and any further interest rate hikes
would hurt Sintexs custom moulding business.
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Valuation
Sintex Industries Ltds revenues grew at ~25% CAGR over FY08-FY11and we have in our estimates
taken a very conservative revenue growth of 9% CAGR over FY11-FY14E. However we believe that
the current market price has already factored in the slowdown in business, concerns over FCCB re-
payment and issues regarding the power venture. We expect the company to generate considerable
free positive cash flow in FY13E to be able to redeem its FCCB comfortably which will also improve its
D/E ratio to 0.3 by FY14. At CMP the stock is trading at 6.3x FY13E P/E and 5.2x FY13E EV/EBITDA.
We initiate coverage on Sintex Industries Ltd with a BUY rating and have arrived at target price of Rs
122 which implies ~27% upside from the current levels. We have valued the stock at 8x FY13E EPS
which is ~33% discount to its long term average P/E.
Peer Comparison
Figure: Peer Comparison
Source: Bloomberg Estimates, BP Equities Research
0
50
100
150
200
250
300
350
400
450
Apr-07
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Sintex Ind Ltd 5.0 X 10.0 X 15.0 X 20.0 X 25.0 X
Figure: 1 year forward P/E Band
Source: C.Line, BP Equities Research
Mcap (Rs bn)P/E (x) EV/EBITDA (x) RoE EBITDA Margins
FY12E FY13E FY12E FY13E FY12E FY13E FY12E FY13E
Sin tex Ind Ltd 26.0 8.6 6.3 6.1 5.2 11.8% 14.2% 16.1% 15.5%
IVRCL Ltd 15.5 23.6 14.5 7.9 6.8 1.1% 1.4% 11.2% 11.5%Nagarjuna Construction 15.6 13.5 10.3 9.6 8.5 3.7% 4.7% 10.2% 10.4%
L&T 822.3 17.1 15.2 12.0 10.5 18.3% 17.7% 13.9% 13.8%
Const ruc tion Average 18.0 13.3 9.8 8.6 7.7% 7.9% 11.8% 11.9%
Supreme Ind 24.8 12.1 9.5 7.5 6.0 32.9% 33.4% 14.0% 14.8%
Time Technoplast 10.0 8.8 6.9 5.8 4.8 15.1% 16.9% 17.6% 17.7%
Plast ics Average 10.5 8.2 6.7 5.4 0.2 0.3 0.2 0.2
Motherson Sumi 67.8 19.0 12.8 9.2 6.7 19.2% 25.1% 8.6% 9.2%
Sona Koyo Steering 2.8 7.9 5.1 4.0 3.3 16.4% 23.4% 12.0% 12.7%
Auto Anci llaries Average 13.4 8.9 6.6 5.0 17.8% 24.3% 10.3% 10.9%
Raymond 22.9 11.7 10.2 6.5 5.8 14.4% 14.8% 15.2% 15.4%
Arvind Mills 26.1 9.2 7.4 7.3 7.0 24.0% 15.0% 15.2% 14.1%
S Kumar Nationwide 11.6 2.7 2.2 4.1 3.4 14.4% 16.0% 19.8% 20.6%
Textiles Average 7.9 6.6 6.0 5.4 17.6% 15.3% 16.7% 16.7%
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Sintex Industries Limited Initiating Coverage
Inst i t u t io na l Research BP Equ i t ies Pvt . L im i ted (www.bpwea l th .com) 15 /2 /2012 23
BP Equ i t ies repor ts a re a lso ava i lab le on Bloomberg [BPEP ]
Income Statement Balance Sheet
Source: Company, BP Equities Research
Source: Company, BP Equities Research
YE March (Rs mn) FY10 FY11 FY12E FY13E FY14E
Net Sales 32,816 44,752 46,809 51,420 57,477
Y-o-Y Growth (%) 7% 36% 5% 10% 12%Other Operating Income 375 86 102 257 287
Total Revenues 33,192 44,837 46,910 51,677 57,764
Less:
Operating Expenses 27,811 36,683 39,347 43,653 49,104
EBITDA 5,380 8,155 7,563 8,024 8,660
Y-o-Y Growth (%) 3% 52% -7% 6% 8%
Less: Depreciation 1,445 1,491 1,793 1,832 1,890
EBIT 3,936 6,664 5,771 6,191 6,770
Less: Interest Paid 731 1,089 1,534 1,080 752
Add: Non Operating Income 878 518 509 1,034 1,155
Profit Before Tax 4,083 6,092 4,746 6,145 7,173
Less: Taxes 772 1,508 1,132 1,413 1,650
Prof it After Tax 3,311 4,584 3,614 4,732 5,524Adjusted Prof it Af ter Tax 3,290 4,600 3,468 4,579 5,524
Y-o-Y Growth (%) 40% 40% -25% 32% 21%
Adjusted Di luted EPS 12.14 16.97 12.80 16.90 20.38
Y-o-Y Growth (%) 1.2% 40% -25% 32% 21%
YE March (Rs mn) FY10 FY11 FY12E FY13E FY14E
Liabilities:
Equity Capital 271 271 271 271 271Reserves & Surplus 19,198 23,745 26,658 30,673 35,983
Net Worth 19,469 24,016 26,929 30,944 36,255
Minority Interest 190 0 0 0 0
Total Loans 26,303 27,738 28,988 16,610 11,570
Deferred Tax Liability 2,050 2,495 2,495 2,495 2,495
Capital Employed 48,012 54,248 58,411 50,048 50,319
Assets:
Gross Block 25,581 33,276 36,976 38,176 39,376
Less: Depreciation 7,746 9,156 10,931 12,763 14,653
Net Block 17,834 24,120 26,045 25,413 24,723
Capital WIP 1,716 1,363 1,363 600 600
Investments 2,222 3,216 3,775 3,775 3,775
Goodwill 2,665 2,190 2,190 2,190 2,190Deferred Tax Assets 357 438 438 438 438
Current Assets:
Inventories 3,411 3,770 4,057 4,664 5,112
Sundry Debtors 10,121 14,229 15,617 16,905 18,109
Cash & Bank Balance 9,295 9,861 9,233 768 677
Loans & advances 8,157 5,147 6,952 7,713 8,621
Total Current Assets 30,983 33,007 35,859 30,051 32,520
Less: Current Liabilities & Provi-sions:
Sundry Creditors 3,947 6,417 7,027 7,982 9,225
Provisions 3,317 3,420 3,454 3,496 3,548
Total Current Liabilities & Provi-sions
8,015 10,644 11,259 12,418 13,926
Capital Applied 48,012 54,248 58,411 50,048 50,319
Free Cash Flow Analysis
Source: Company, BP Equities Research
YE March (Rs mn) FY10 FY11 FY12E FY13E FY14E
EBITA 3,936 6,664 5,771 6,191 6,770
Less: Adjusted Taxes 744 1,650 1,413 1,425 1,557
NOPLAT 3,192 5,014 4,358 4,766 5,213
Plus: Depreciation 1,445 1,491 1,793 1,832 1,890
Gross Cash flow 4,636 6,505 6,151 6,599 7,103
Less: Increase in Working Capital 7,504 (959) 2,820 1,916 1,291
Operating Cash flow (2,867) 7,464 3,331 4,683 5,812
Less: Net Capex 1,197 7,423 3,718 437 1,200Less: Increase in Net Other Assets 269 (688) 77 (88) (117)
FCF From Operation (4,333) 729 (463) 4,334 4,729
Less: Inc./(Dec.) in Investment 130 312 (559) 0 0
FCF after Investment (4,463) 417 96 4,334 4,729
Plus: Gain/(loss) on Exceptional Items 0 0 (611) (600) 0
Prior Period and Minority Interest(Adjustments)
(21) 16 21 0 0
Total FCF (4,484) 433 (494) 3,734 4,729
Key Ratios
Source: Company, BP Equities Research
YE March (Rs mn) FY10 FY11 FY12E FY13E FY14E
Key Operating Ratios:
EBITDA Margin (%) 16.2% 18.2% 16.1% 15.5% 15.0%
Tax / PBT (%) 18.9% 24.8% 27.4% 25.5% 23.0%
Net Profit Margin (%) 9.9% 10.3% 6.4% 8.0% 9.6%
RoE (%) 17.9% 21.1% 13.6% 15.8% 16.4%
RoCE (%) 8.6% 10.6% 8.1% 9.9% 12.1%
Current Ratio (x) 3.9x 3.1x 3.2x 2.4x 2.3x
Dividend Payout (%) 5.8% 4.5% 3.9% 4.6% 5.2%
Book Value Per Share (Rs.) 72 89 99 114 134
Financial Leverage Ratios
Debt/ Equity (x) 1.4x 1.2x 1.1x 0.5x 0.3x
Interest Coverage (x) 7.4x 7.5x 4.9x 7.4x 11.5x
Interest / Debt (%) 3.0% 4.0% 5.4% 4.7% 5.3%
Growth Indicators %
Growth in Gross Block (%) 7.5% 30.1% 11.1% 3.2% 3.1%
Sales Growth (%) 7.1% 36.4% 4.6% 9.9% 11.8%
EBITDA Growth (%) 3.1% 51.6% -7.2% 6.1% 7.9%
Net Profit Growth (%) 1.2% 39.8% -34.3% 36.6% 33.7%
Diluted EPS Growth (%) 1.2% 39.8% -34.3% 36.6% 33.7%
Turnover Ratios
Debtors (Days of net sales) 108 112 117 115 110
Creditors (Days of Raw Materials) 52 64 65 67 69
Inventory (Days of Optg. Costs) 45 38 38 39 38
Valuation Ratios
Source: Company, BP Equities Research
YE March (Rs mn) FY10 FY11 FY12E FY13E FY14E
Adjusted P/E (x) 7.9x 5.6x 7.5x 5.7x 4.7x
P/BV (x) 1.3x 1.1x 1.0x 0.8x 0.7x
P/CEPS (x) 5.5x 4.3x 4.9x 4.0x 3.5x
EV/EBIDTA (x) 8.0x 5.4x 6.1x 5.2x 4.3x
7/29/2019 Sinindus 20120215 (Good)
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