Sintex Industries (Sintex) has reported disappointing Q1FY09 numbers due to lower volumes in the BT shelter business and below-expected textiles revenues.
While net sales increased 108% y-o-y to Rs7.1 billion, this was spurred by the acquisitions of Bright AutoPlast, Nief Plastics and Wausaukee rather than growth in core operations.
Higher employee costs and other expenditure shaved 590bps off the EBITDA margin to 11%. The company reports installation income on prefab construction under other income, which trebled to Rs380 million during the quarter.
Increased interest and depreciation offset the positive impact of other income, causing Sintex’s net profit to grow much below our expectations at 68% y-o-y to Rs567 million.
We are revising our estimates downwards in view of the below-expected quarterly results, tight market conditions and higher cotton and crude oil prices, which are weighing on margins. The revised target for the stock now stands at Rs503 from Rs587 earlier.