Buy: Sintex Industries Ltd
CMP: Rs.13.60
Face Value: Re.1
Book Value: Rs.68.33
Dividend Yeild: 1.84%
EPS: Rs.2.46
P/E: 5.52
Industry P/E: 21.16
BVM is a vertically integrated plant having its own Spinning to finishing facilities. BVM has been the undisputed leader in varied product mix for the last 70 years with a continuous expansion of its product range. Since last 20 years, it has established a name in the global marked with its yarn dyed/piece dyed shirting, corduroy & bottom weight . SIL has set up a marketing and technical joint venture with Italian player Cancilini to tap the European market for shirting fabrics. Our Its manufacturing operations are spread over an area of three lakh sq. meters across strategic locations.
Sintex is one of the largest producers in India.
Financials: The company reported a rise of 11.5% in the net profit for Q1FY19 at Rs.39.1 crore against Rs.35.1 crore reported during the same quarter of last year. Its revenues for Q1FY19 rose 35% to Rs.925.3 crore against Rs.687.6 crore on year on year basis. On an operating basis, the EBITDA rose 45% to Rs.109.9 crore against Rs.75.6 crore, year on year. Meanwhile, the consolidated EBITDA margin came in at 11.9% in FY19 as against 11% on Y-o-Y basis.
The company has a Debt Equity Ratio of nearly 1 (one), Current Ratio of around Rs.2.2 and Interest Coverage Ratio of 2.5. The debt equity ratio is a little high because of continuous capex during the last few years. However, this will get reduced in the coming months as its new capacity goes on stream.
Financials: The company reported a rise of 11.5% in the net profit for Q1FY19 at Rs.39.1 crore against Rs.35.1 crore reported during the same quarter of last year. Its revenues for Q1FY19 rose 35% to Rs.925.3 crore against Rs.687.6 crore on year on year basis. On an operating basis, the EBITDA rose 45% to Rs.109.9 crore against Rs.75.6 crore, year on year. Meanwhile, the consolidated EBITDA margin came in at 11.9% in FY19 as against 11% on Y-o-Y basis.
The company has a Debt Equity Ratio of nearly 1 (one), Current Ratio of around Rs.2.2 and Interest Coverage Ratio of 2.5. The debt equity ratio is a little high because of continuous capex during the last few years. However, this will get reduced in the coming months as its new capacity goes on stream.
Key Triggers:
#The demerger has enabled Sintex Industries Ltd to focus on its core businesses by streamlining operations, cutting costs and ensuring more efficient management control.
#The first phase comprising 3.06 lac spindles of the high-tech yarn facility at Pipavav, Gujarat commenced operations in the first half of FY 2016-17 with spinning quality compact yarn for weaving and knitting application. It achieved a capacity utilization of about 98% by the close of the last financial year.
#Sintex Industries Ltd is also implementing a spinning project with 6 lacs spindle in two phases at Amreli, Gujarat. After setting up the project, around 50% of yarn will be used for captive use and balance would be sold in the open market. The expansion will be eligible for getting interest subsidy of 7% as applicable for spinning units under the Textile Policy Scheme of Gujarat Government.
#In last 4-5 years the company has spent around Rs.4000 crore in Textile business. Further, the company is undergoing a capex of Rs.3200 Crore which is expected to get completed by FY19. Hence, after these slew of expansions, the revenue of the textile division is likely to go up significantly.
#In comparison to the series of expansions, the market cap of the company is only around Rs.807.38 crores. This leaves lot of scope for the increase in shareholder value.
##Last week, the government of India, doubled the import duty on over 50 textile products, like jackets, suits and carpets to 20%, a move that is aimed at promoting domestic manufacturing. The imported products which have become expensive include woven fabrics, dresses, trousers, suits and baby garments.
Under the BVM brand, Sintex Industries Ltd supplies fabrics to reputed international and domestic brands like Arrow, Van Heusen, Marks & Spencer, Ann Taylor, and global fashion labels like Armani, Hugo Boss, Diesel, Burberry, S.Oliver, banana republic, Pepe Jeans, Nike, Zodiac, Canali, The Royal Mint, Massimo Dutti, Mexx, Zara, DKNY, Armani, Colour Plus, H&M, Versace and Tommy Hilfiger.
If we look at the candle stick chart, we can see that it has formed an inverted head like pattern on the daily chart with falling volume, indicating that the company has perhaps formed an intermediate bottom. Buy the stock at the CMP of Rs.13.6 for short term targets of Rs.18-19.
#The first phase comprising 3.06 lac spindles of the high-tech yarn facility at Pipavav, Gujarat commenced operations in the first half of FY 2016-17 with spinning quality compact yarn for weaving and knitting application. It achieved a capacity utilization of about 98% by the close of the last financial year.
#Sintex Industries Ltd is also implementing a spinning project with 6 lacs spindle in two phases at Amreli, Gujarat. After setting up the project, around 50% of yarn will be used for captive use and balance would be sold in the open market. The expansion will be eligible for getting interest subsidy of 7% as applicable for spinning units under the Textile Policy Scheme of Gujarat Government.
#In last 4-5 years the company has spent around Rs.4000 crore in Textile business. Further, the company is undergoing a capex of Rs.3200 Crore which is expected to get completed by FY19. Hence, after these slew of expansions, the revenue of the textile division is likely to go up significantly.
#In comparison to the series of expansions, the market cap of the company is only around Rs.807.38 crores. This leaves lot of scope for the increase in shareholder value.
##Last week, the government of India, doubled the import duty on over 50 textile products, like jackets, suits and carpets to 20%, a move that is aimed at promoting domestic manufacturing. The imported products which have become expensive include woven fabrics, dresses, trousers, suits and baby garments.
Under the BVM brand, Sintex Industries Ltd supplies fabrics to reputed international and domestic brands like Arrow, Van Heusen, Marks & Spencer, Ann Taylor, and global fashion labels like Armani, Hugo Boss, Diesel, Burberry, S.Oliver, banana republic, Pepe Jeans, Nike, Zodiac, Canali, The Royal Mint, Massimo Dutti, Mexx, Zara, DKNY, Armani, Colour Plus, H&M, Versace and Tommy Hilfiger.
If we look at the candle stick chart, we can see that it has formed an inverted head like pattern on the daily chart with falling volume, indicating that the company has perhaps formed an intermediate bottom. Buy the stock at the CMP of Rs.13.6 for short term targets of Rs.18-19.
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