CONFERENCE CALL - from Capital Markets
Revised top-line growth and bottom-line growth to 15% in FY16
Sintex Industries held a conference call to discuss the results for the quarter ended December 2015. Following are the key highlights of the call:
Highlights of the call
The consolidated net sales for Q3 FY16 have inclined by 12% to Rs 2044.98 crore. The net profit has increased by 11% to Rs180.10 crore.
On an avg. commodity price drop by 20% in Q3.
The company has seen large volume in Q3.
The sales of Prefab building systems was Rs 583 crore (up 41%), monolithic was Rs 253 crore, custom molding was Rs 869 crore, and textile was Rs 256 crore.
Executions under CSR for corporate's and clean India initiatives driven by government spending, significantly boosted Prefab revenues.
Building materials business grew 21%. Government spending has picked up the momentum which will entail smooth flow of orders. While picking up of corporate sector for CSR spending and capex's in longer term will ensure a robust pipeline for building materials.
Prefab saw large order from lower contribution products like toilet and waste bin, which impacted the margin in Q3. Don't expect margin to come down future.
The mgmt said Clean India saw large order in Q3 and even positive moment from CSR activities. If volume maintains, the mgmt will think of expansion in pre-fab facility.
Reflecting the festive season and aggressive promotions by automotive manufacturers, the domestic custom molding grew 34%. While a weaker Euro negated overseas revenue impact
The fabrics business grew 38% for the quarter under review with launch of innovative designs and varied product mix.
EBIDTA of Prefab building systems was Rs 121 crore, monolithic was Rs 36 crore, custom molding was Rs 117 crore, and textile was Rs 58 crore
Textile saw 38% growth due to yearn trading business which it started recently
Increase in cost of material because it produces 30% more products.
The company subsidiary has formed JV to manufacture fuel tank for major automobiles players in India
The spinning project is progressing in full swing with 35,000 spindles. Initially, envisaged capacity of 1,00,000 spindles on commercial basis will commence production in near future. Full utilization will take 9 months and optimization of product mix will take 18 months.
The company is going to produce compact yarn. It will be significant player once complete. At present, 1.5 mn spindles is installed capacity of India
The mgmt said that people are switching to compact yarn from older technologies. Compact yarn demand is quite strong. We are producing high value and value added yarn.
For yarn, China is a big customer. Yarn business can be impacted due to slowdown in China. China is largest market; it controls around 36% of world textile market
The mgmt expects Rs 800- 1000 crore revenue from spinning in FY16-17 and Rs 1400 crore in FY17-18. Reduce estimates due to cheaper cotton.
Margin for spinning will be 19% in FY16-17, without incentive.
The company saw increase in net debt by Rs 500 crore vs September 2015 due to spinning biz.
The mgmt has revised topline growth and bottomline growth to 15% in FY16 from earlier guidance of 20% due substantial fall in commodities prices.