Despite the economic slump, Sintex Industries has been able to maintain its growth. The company's Q3FY09 sales were up by 30 per cent followed by 22 per cent growth in net profit. The company has been growing consistently in the past led by investments in fast growing businesses and partly due to acquisitions. Sintex manufactures plastic products such as custom mouldings and, prefabricated and monolithic structures, which are widely used in different industries, household and construction of temporary and permanent housing. The company has also extended its product portfolio covering sectors like aerospace, wind power, defence and consumer durables by way of acquiring new technologies and companies in the overseas markets (five companies in last 15-18 months).
While margins contracted to 13.2 per cent (down 340 basis point y-o-y) on account of high raw material prices and inventory losses (Rs 25-30 crore) in Q3FY09, they should improve in the coming quarters due to the 30-40 per cent correction in petrochemical prices (main raw material) and absence of inventory losses.
Overall, in the near term, there could be some concerns regarding its international operations given the slowdown in global markets (especially automotive plastic segment). However, the company is still expected to maintain a healthy revenue growth of about 25 per cent over the next two years. Notably, valuations are attractive as the stock is trading at 0.55 times its estimated book value and 3.9 times its estimated earnings for FY10.
source : business-standard