Firstcall Research has recommended 'Buy' on Sintex Industries with target price of Rs 125 as against current market price of Rs 108.35 in its report.
Commenting on the investment rationale, the broking firm said, "Net sales of the company have increased by 9.75% to Rs. 21,763.38 million in the quarter as against Rs 19,830.61 million over the corresponding quarter in the previous year. Net profit grew by an insignificant 22.71% of Rs. 19,77.84 million in Q4 FY15 as compared to Rs. 1,611.74 million over corresponding quarter of previous period. EBIDTA was up by 24.34% to Rs. 4,562.08 million in Q4 FY15 as against Rs. 3,669 million over the same quarter previous year. Profit before tax increased by 63.10% to Rs. 2,928.82 mn from Rs. 1795.77 mn in Q4 FY14. The global business grew a significant 22% in INR terms, though Euro was subdued in second half of FY15, else the growth would have been higher. Driven by strong utilization, new product launches and healthy response from customers the textile business revenue rose by 33% during FY 15.EBIDTA margins were at 25% during the year under review.
The spinning expansion is in full swing to commence 1,00,000 spindles by September 2015. The balance 2,20,000 spindles will be operational by March 2016. Once fully commissioned the facility will be the largest compact spinning capacity at a single location in Gujarat. The company has made significant strides during the year which is reflected in top line growing at 20% and bottom line over 45%. Domestically, the Make in India initiative taken by the government of India will augment the long term growth for the company business.
At the current market price of Rs. 108.35, the stock P/E ratio is at 7.10 x FY16E and 6.00 x FY17E respectively. Earnings per share (EPS) of the company for the earnings for FY16E and FY17E are seen at Rs.15.25 and Rs.18.06 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 28% over 2014 to 2017E respectively. We recommend 'BUY' in this particular scrip with a target price of Rs. 125 for medium to long term investment."
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