Coming back to my running commentary on Sintex. Still hold at 60Rs.
Why has the company not hit Re.1 EPS which should be normal earnings. ONE REASON. Interest cost. Interest cost went up by 13Cr which is Re.0.2 impact to earnings (0% tax assumed)
By my calculation interest actually should have been at 70Cr or in earnings terms Rs.0.3 impact to earnings which would have given you Re.1 earnings.
Reason for interest cost at this level.
- Company said 9Cr impact was from forex translation which makes sense.
- Due to working capital they could not reduce debt much (Rs200 cr stuck overdue)
Company reduced debt by 288Cr but gross debt looks same as 1400Cr is dollar denominated, which again makes sense. Whether you believe the management or not is another question.
Growth is slack but I was not baking in any growth this year. With all the changes, difficult for any company to turn around in 2-3 quarters.
Disc - Was thinking of selling it but after call think will hold on for another quarter. Guess Monday will be in red.