Sintex Industries (Sintex) is a market leader in the manufacture and sale of valueadded plastics and textile-based products. Sintex intends to leverage its established brand name to increase its Revenues and Profits going ahead.
Moreover, an excellent Order Book lends high Revenue visibility to its Monolithic Business Division.
The company is reputed for its acumen to recognise and enter new and evolving businesses. Sintex’s growth plans are adequately funded and we believe it is wellplaced to achieve its targets on schedule.
The monolithic and prefab business put together have a strong order book of Rs1,600 crore.
On a conservative basis, we estimate the company’s topline and bottomline to post CAGR of 32.6% and 36.3% over FY2008-10E, respectively.
At Rs192, the stock is trading at 6x FY2010E EPS. We initiate coverage on the stock with an ACCUMULATE recommendation and 12-month target price of Rs230, which translates into a target P/E of 8x FY2010E adjusted EPS.
It may also be noted that we have not converted the FCCBs issued by the company and the warrants to promoters into Equity on account of the current adverse market conditions.
We have calculated interest that would be paid out on FCCBs every year until maturity at YTM and have accordingly adjusted Net Profit of the company and calculated Adjusted EPS thereof.