Market Price Rs 27 (FV 1 )
Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 1503 crs
Date: 11th July 2017
Target : Rs 45 ( 1 Year)
About the Company:
Sintex Limited is a company promoted by Amit Patel & Rahul Patel & family. It has been in limelight since it launched the Plastic Tank. It has been market leaders in this industry. It started as a Textile company and then diversified into plastic products and it manufactures niche plastic products. In 2017 the company got split in Sintex Industries & Sintex Plastic Technologies. Sintex Industries retained the textile business and the plastic business was shifted to Sintex Plastic Technologies.
The main products of the company include yarn and textiles. The International clients include Armani, Boss, Zara, DKNY, MEXX, Burberry, Diesel, Canali, Versace, Nike, Tommy HilFiger, MAX, Pepe Jeans, and the local Indian customers include Arrow, Wills, Van Heusen, Zodiac, Allen Solly, Reid & Taylor & Louis Philippe. Sintex is into high end textile products and the PE rerating is possible in the medium to long term and valuations are good. .
The company reported the sales for year of 1900 crores plus for the year 2017 and the Net profit was in the region of 134 crores. The EPS was Rs 2.78 per share and book value stood at 72 per share. Going forward we expect the sales to go up to 4500 crores and EPS would be Rs 4.5 per share. The main reason for this will be 6 lac spindles added to the capacity. The Debt stands at Rs 4000 crores. Good part about it is that rate of interest is just 2% and also the power is available @ Rs 1 per unit for the next 5 years.
Promoters hold about 32.47 % , Fii’s hold 26% and, the rest of it is public holding.
Comparisions to Peers:
The company can get a PE of 10 at the end of this year. It can be compared to Vardhman Textiles , Arvind Ltd etc.
Sintex is seeing huge capacity expansions. The current capacity is 8 lac spindles and 3 lac spindles were added in june 2017 and another 3 lac spindles will be added in August 2017. The effect of all this will come into account in this year and as this will help the company to post an EPS of Rs 4.5 per share, and the book value of the share being much higher than the market price, the stock is expected to hit the 45 mark.
At current price of Rs 27 per share the company is available at a low valuation. If bought at current valuation, it can easily cross Rs 45 per share in the next 1 year.
( Disclosure: The analysthas noholdings in the company as on date of issue being published)
Sebi Registration No: INH000001717