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Sintex Ind.: Staggering growth in Custom Molding and Textile segments - Views on News from Equitymaster
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  • Oct 16, 2015 - Sintex Ind.: Staggering growth in Custom Molding and Textile segments

Sintex Ind.: Staggering growth in Custom Molding and Textile segments
Oct 16, 2015

Sintex Industries has announced the second quarter results of financial year 2015-2016 (2QFY16). While the topline grew by 13.7% YoY, bottomline grew at a faster pace of 35.7% YoY during the quarter.
Performance summary
  • Net sales increase 13.7% YoY during 2QFY16.
  • Operating profit remained constant at 17.2% during the quarter.
  • Other Income surged during this quarter by 105%. Due to this, net profit has increased by 35.7%. YoY. After adjusting for exceptional losses, net profit increased to the tune of 29.4%.
  • During the quarter, FCCBs aggregating to US $ 0.75 million have been converted to 627,004 equity shares resulting in dilution. There is no outstanding FCCBs as at 30 September 2015.
  • Consolidated Financial Snapshot

    (Rs mn) 2QFY15 2QFY16 Change
    Total income 16,809 19,119 13.7%
    Expenditure 13,931 15,839 13.7%
    Operating profit (EBITDA) 2,878 3,281 14.0%
    Operating profit margin (%) 17.1% 17.2%  
    Other income 61 125 105.3%
    Interest 676 657 -2.9%
    Depreciation 602 705 17.2%
    Profit before tax & exceptional items 1,660 2,044 23.1%
    Tax 544 590 8.5%
    Net foreign exchange gain/loss (52) -  
    Share of profit from associates 10 4 -63.7%
    Profit after tax/(loss) 1,074 1,457 35.7%
    Net profit margin (%) 6.4% 7.6% 19.3%
    No. of shares (m)   444.6  
    Basic diluted earnings per share (Rs) ^   3.28  
    P/E ratio (x) *   8.0  

    * On trailing 12 month basis
    ^Based on latest number of shares outstanding

    What has driven performance in 2QFY16?
    • In 2QFY16, building material segment grew at modest pace of 4%. In this segment, prefab grew at 46% during the quarter. This was achieved through increased penetration in orders in healthcare, education and sanitation segment products.
    • Custom molding segment grew at strong pace of 19%. Textile segment also grew at 35% during this quarter and now contributing 12.1% to the topline in 2QFY16 vs 10.1% 2QFY15
    • Operating profits increased 14% YoY with margins expanding to 17.2%.
    • In line with operating profits, bottom line increased by 35.7% YoY. A 105.3% YoY rise in other income boosted net profits. However, depreciation expenses also increased by 17.2% YoY, thereby restricting profit growth to an extent. After adjusting for exceptional losses, net profit increased to the tune of 29.4%.
    What to expect?

    At the current price of Rs 104, the stock trades at around 8 times its trailing twelve month earnings.

    Custom molding segment had another excellent quarter and this was possible due to company's focus on value added segment including two paint shops in India, integration of complex metal over plastic technology. Company's newer products have also started seeing the momentum which include RO water enclosures, sewage treatment products and biogas chambers.

    We have put this stock under review and will update the same shortly.

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