Highlights of the call by Capital Mkt
The consolidated net sales for Q2 FY16 have inclined by 14% to Rs 1911.94 crore. The net profit has increased by 37% to Rs145.73 crore on the back of increased value-added segments of custom molding and prefabs.The sales of Prefab building systems was Rs 578 crore (up 46%), monolithic and EPC was Rs 173 crore, overseas custom molding was Rs 440 crore, domestic custom molding was Rs 390 crore (up 33%), storage tank was Rs 91 crore and textile was Rs 232 crore.The margin in prefab was 21%, monolithic was 13%, custom molding India was 19% & overseas was 10-11% and textile was 21%.
Total custom molding grows 19% due to our focus on value added segment including 2 paint shops in India, integration of complex metal over plastic technology from recent acquisition of Groupe Simonin and strong customer relationship.. Sintex has already signed a JV with an Italian Rotomolding technology provider to focus on emission compliant products.The custom molding India's 90% of revenue comes from automobile, which has helped for stronger custom molding India growth. International business has grown because of various segments.
The custom molding India margin is coming down. The mgmt said that custom molding India margin depend on product and products mix. There are 1000 products and each product has different margin.The mgmt said that it will improve international custom molding business.
Prefab grew 46% during the quarter. This was achieved through increased penetration in orders in already successful healthcare, education and sanitation segment products. On top of it, newer products have also started seeing the momentum. Like RO water enclosures, Sewage treatment products and Biogas chambers. Sintex would continue to remain ahead of curve and the needs of Indian society by innovating simple and affordable solutions like waste treatment solutions, Bio digesters etc.
Margins have come down in prefab due to low margin new products like toilet one. However they have helped the volume to grow.Expects 25% growth in prefab, the way toilet order getting.In FY13-14 done large capex in textile business which has help it to clock good growth in Q2. Currently it is running at full capacity. Don't see big growth in textile business in Q3 and Q4, if raw material cost remain same,
Raw material up on YoY and QoQ despite falling raw material prices, due to FIFO effect. Whenever raw materials price comes down, will see raw material cost % to sales to go up temporary. Raw material % to sales will be at 60% in coming quarters.Monolithic revenue growth was negative which help to bring down receivables. Receivables are around 120 days.
Sintex is in the process of conducting trials for 30,000 spindles. 1,00,000 spindles to be fully operational between November-December. Work on 2,00,000 spindles are progressing on track
.Spinning target capacity utilization will be 92- 96%. To achieve it will take 6 months. Rs 1250- 1400 crore revenue on current numbers.Spinning revenue will start within 45 days. Commission of entire project will start be on March 2016. Depreciation and interest will come from next year.
Raw material cost to sale is 60% in spinning business.
The company is putting compact cotton spinning spindles, which doesn't have excess capacity in India.The company will do 60 - 90% export in spinning business.
Not more focus on infra business including monolithic business. So that receivables can be manageable.Debt increased by Rs 576 crore . Avg. Cost of debt – 11% minus subsidy.
Loan repayment is Rs 82 crore for FY16 and Rs 200 crore FY17.
The capex on custom molding and prefab is Rs 300- 400 crore. Textile is less than Rs 100 crore. That includes routine capex which is 50-60% of deprecation.Annualized capex is Rs 450 crore for FY16.Positive outlook in custom molding and prefab in H2. Will maintain earning guidance for FY16 of 20% top-line growth.Tax rate FY16 - 30%.