The title more aptly should be “Don’t ‘blindly’ believe on what analysts say”. I have been tracking Sintex from before demerger times. Have seen it decline for months now post-demerger. Got interested when it came below 80. Valuation criterion differ for each investor. I arrived at 75 which is a level where I feel all ills are accounted for. Accumulated it all the way from 75 and down to 68 with an average of 72. Its only in FY19 its growth will be visible I believe, so I am sitting tight after getting the required quantity at my desired price.
Why broadly? Topline has declined for which the management guidance was already in place. Prefab is the business which is troubling at the moment and not custom molding. Company expects to see good growth in custom molding going forward while the Prefab unit will pick up from FY19 Q3. I still have to go through their presentation for more details.
Results were a mixed bag. Management highlighted following points in concall. Since this is all I could remember, I would request others to add any point I have missed out on.
- Promoters wanting to increase stakes by 11% to total 40% by next FY end.
- Govt. business getting headwinds and willfully being less pursued by company. Planning to phase out govt. business slowly. Retail private business growing well. Retail business working cap is very low so cash conversion is quick, while govt contracts are heavy on balance sheet and cash realization takes time.
- Targeting 35%+ market share in tanks and 22% in factory molded doors
- Margins would be around 15.5-18 percent
- Total debt reduces by 300 cr .Now debt stands at 3331 cr down from 3628 cr from Mar-17
- Pre fab order book just 450 cr. which is low
- Six months orders already there going by current run rate
- 423 cr CFO from nine months after working capital adjustments
- Custom molding can grow strongly in FY 18-19. Europe is reviving…aerospace is gaining traction (More business from these sections of the market). Locally in India, retail and electrical business would do well. India business growing by 20%…exports business to increase by 10%. 18-22 percent revenue growth expected in India retail business
- EBITDA to Debt of 2 is their target. Once this target is reached more acquisitions/expansion may be pursued
- Debt to reduce by a minimum of 300 cr in FY19
- ECB loans around 55 ml. US$. Agreement in progress with KKR to reduce interest by 1.5% and improve liquidity and increase maturity period. In next two weeks they may close it and announcement will be made
- In 4th qtr, prefab would be stronger. Custom molding would be 2-5% heavier than average of qtr 1,2 and 3
- FY 19 q3 prefab would see traction. Coming up with new products with CSR focus
- They will disclose depreciation numbers to clarify differences between EBIT and EBITDA margins after the call
Thank you for the timely help.