Performance summary
Consolidated sales grow by 3% YoY during 3QFY10. Growth led by the plastics division where sales grew 5% YoY during the quarter. Sales for the textile division fell by 6% YoY. Overall sales decline by nearly 3% YoY during the nine-month period ended December 2009.
Operating margins expand to 18.1% during 3QFY10, from 16% in 3QFY09. Expansion led by lower other expenditure. Otherwise, raw material costs rise on the back of higher commodity prices.
A good operating performance fails to lead to a good bottomline picture. Higher depreciation impacts net profits, which rise by just around 2% YoY during 3QFY10, as compared to the 17% YoY growth in operating profits. 9mFY10 profits decline by around 10% YoY.
What to expect?
At the current price of Rs 270, the stock is trading at a multiple of 10.1 times our estimated FY12 consolidated earnings for the company. Sintex’s nine-month performance is as anticipated. The management believes that it is seeing some strong signs of a pickup in economic activity that is leading to higher capacity utilization for the company. Overall, we maintain our positive view on the stock at the current juncture. One can keep HOLDing this stock.
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