10 June 2014
Update | Sector: Others
Sintex Industries
BSE Sensex
25,584
S&P CNX
7,656
CMP: INR101
TP: INR127
Buy
Raising estimates post management interaction
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Expect 27% PAT CAGR over FY14-17; maintain Buy
SINT IN
313.1
107/17
87/197/80
31.5
0.5
Financial Snapshot (INR Million)
Y/E March
2015E 2016E 2017E
Net Sales
68,387 80,349 93,461
EBITDA
Adj PAT
EPS (INR)
Growth (%)
BV/Share
( )
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
11,281 14,973 18,334
4,614 5,782 7,773
12.8
4.5
11.1
10.2
7.9
0.8
17.2
34.8
13.1
11.9
5.8
0.7
21.8
26.3
14.4
13.0
4.6
0.6
Post our interaction with the management of Sintex Industries (SINT), we are
raising our FY15/16E EBITDA by 6-9%. Given the high operative leverage, our EPS
estimates increase 21% for FY15 and 26% for FY16. Earnings CAGR over FY14-17
would be 27%.
The earnings revision is driven by expectation of (1) higher growth and margins in
domestic custom molding, and (2) higher PBT contribution from new spinning
project from FY16.
We value SINT at INR150/share (EV of 6.5x FY16E EBITDA); adjusting for potential
dilution of ~27%, we set our target price at INR127/share – 26% upside.
Prefabs: Growth to sustain on rising social spending, new products
123.3 140.1 162.8
Shareholding pattern (%)
As on
Mar-14 Dec-13 Mar-13
Promoter
Dom. Inst
Foreign
Others
41.0
7.0
9.5
42.5
37.0
6.9
11.5
44.6
36.2
12.1
23.9
27.9
Rise in social spending, along with immense opportunities in the B2B (CSR,
retail orders) and B2G segments (sanitation, education, healthcare,
warehousing, cold storage, and defense), offers meaningful growth
opportunity.
Pan India presence, with strategic plant locations, tie-ups with various state
governments, and strong distribution networks gives SINT the ability to
effectively tap this opportunity. Prevailing growth would also necessitate
gradual increase in capacities.
Innovative offerings in biogas, sewage treatment, etc, should add revenue
streams. We expect 20% revenue CAGR to sustain over FY14-17, with 24-
25% margins.
Monolithic segment: Expect better visibility in 2HFY15
Stock Performance (1-year)
Focus remains on managing working capital strength, with selective
execution of projects having lower receivables and lesser approval
uncertainties.
Working capital days of 123 (v/s ~200 at peak) are within the comfort zone,
and offer revenue visibility of INR7b-7.5b on the back of ~INR10b order
book.
While the management is optimistic on unshackling of the decision making
system and gradual unleashing of opportunities in the monolithic vertical,
further clarity should emerge over the next few quarters, as the
government shares its priorities.
EPC contracts (INR13b order book from Shirpur Power Plant) would offer an
additional revenue stream of INR8b-9b in FY15. However, visibility of
additional order book in this segment is limited as on date.
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.

Sintex Industries
Composites: Expect recovery
Overseas business delivered stronger growth (16%) along with uptick in
profitability during FY14 on the back of gradual ramp-up in operations in
recently-acquired plants in Poland and Germany, and overall turnaround in
demand in the EU market.
Weak domestic automobile demand led to sharp de-growth in Bright
Autoplast, which should now see a recovery to normalcy (15-20% growth)
over FY15-16. Operating leverage is likely to drive up margins.
While continued shift towards composites the across globe should propel
demand, much of SINT’s planned synergies between domestic and global
operations – segmental diversification, cross-selling, outsourcing of low cost
components, etc – should gain momentum, driving up profitability.
SINT’s Gujarat spinning project (0.3m spindles) is likely to start operations in
phases from 4QFY15, with full commencement in October 2015.
The management expects annualized revenue of ~INR18b (1x capex) from
FY16, with margins of 27-30% and IRR of ~20%.
~70% of the production would be export-driven. Situated in India’s largest
cotton producing state and due to its proximity to Pipavav port, the plant
would have the advantage of lower inward/outward lead distances and
freight cost.
Additionally, Gujarat state policy renders benefits of lower interest cost on
capex (adjusted for 7% state subsidy, net interest cost reduces to 2-3%),
and power subsidy, which make overall profitability healthier.
We factor in INR12.6b/INR17b revenue (25%/28% margins) in FY16/17 from
the spinning project.
SINT would be investing a further INR10b in the spinning project in FY15. In
addition, it would have annual capex of INR5b-6b in FY16 and FY17 – INR1b-
1.5b maintenance capex and balance towards composites/prefab capacity
enhancement to support stronger growth expected in these segments.
We expect debt to peak at INR50b in FY15 (1.25x), the management’s
guided level of maximum comfortable gearing level.
USD140m FCCB raised in FY13 has recently seen reset of conversion price of
INR65.74/share (v/s raising price of INR75.6/share), aiding high probability
of conversion and potential equity dilution of ~27%.
We are raising our FY15/16E EBITDA by 6-9%. Given the high operative
leverage, our EPS estimates increase 21% for FY15 and 26% for FY16.
Earnings CAGR over FY14-17 would be 27%.
The earnings revision is driven by expectation of (1) higher growth and
margins in domestic custom molding (9% revenue CAGR over FY14-17 v/s
6% earlier), and (2) PBT contribution from new spinning project from FY16.
The stock trades at 5.9/4.7x FY16/17E EPS, 0.7/0.6x FY16/17E BV, and at an
EV of 54x/4.2x FY16/17E EBITDA. We value SINT at INR150/share (EV of 6.5x
FY16E EBITDA); adjusting for potential dilution of ~27%, we set our target
price at INR127/share (upside of 26%).
2
Spinning: New growth avenue with favorable dynamics
Leverage hinges on operational recovery; FCCB dilution a concern
Raising estimates, setting target price at INR127; Buy
10 June 2014

Sintex Industries
Rise in social spending,
along with immense
opportunities in B2B and
B2G segments offer
meaningful growth avenue
and further rise in
utilization from 75%
Prefab business posted robust growth and margin expansion, momentum should continue
Margins (%)
39
Revenue growth (%)
35
14
1
-16
17
FY10
20
12
20
20
20
19
FY08
20
FY09
21
FY11
20
FY12
19
FY13
25
FY14
24
FY15E
24
FY16E
24
FY17E
India operations of custom
molding to see recovery to
normalcy in OEM (Bright
business), coupled with
steady growth in electrical
business
Gradual return of growth in domestic composites
84
Margins (%)
Revenue growth (%)
5
22
FY08
15
FY09
15
25
21
29
0
5
20
FY15E
12
21
FY16E
12
21
FY17E
20
FY10
21
FY11
19
FY12
19
FY13
20
FY14
Overseas composites to improve on margins led by steady ramp-up and synergy benefits
Improving macro in US and
EU to drive overseas
composites where many of
its planned synergies on
product and client side
should start playing out
-1
12
FY10
12
FY11
FY12
Margins (%)
25
16
12
-6
8
FY13
9
FY14
9
FY15E
9
FY16E
10
FY17E
16
10
11
10
Revenue growth (%)
New spinning project to
drive additional revenue
sources along with strong
margins/IRR and low
interest cost benefits
New spinning project offers strong source of revenues
Textile Rev (INR b)
Spinning revenue (INR B)
13
2
3
FY08
4
FY09
3
FY10
4
FY11
5
FY12
5
FY13
5
FY14
6
FY15E
6
FY16E
17
6
FY17E
10 June 2014
3

Sintex Industries
Monolithic revenue to remain subdued, EPC revenue to offset in FY15
Amidst optimism on new
government’s growth
policy, management keeps
guidance on monolithic
business conservative
Monolithic Rev (INR b)
19
18
18
13.4
2.1
FY08
4.5
FY09
7.2
FY10
FY11
10.9
15
FY12
FY13
FY14
FY15E
FY16E
FY17E
19
20
18
3.6
10.0
8.9
18
8.5
7.0
18
2.5
7.7
18
2.5
8.8
EPC Rev (INR b)
Margins (%)
Source: Company, MOSL
Positive FCFE FY16 onwards with moderation of capex and capacity consolidation (INR b)
Capex on spinning project
to keep leverage high and
FCFE negative till FY15, post
with capex to moderate
with only incremental
annual spending of INR5-6b
towards Prefab, and
Composites
0.0
-1.2
-4.7
-9.8
-5.2
-5.9
-6.9
-10.9
-13.4
2.0
3.3
27% earnings CAGR to drive capital efficiencies (%)
Stronger revenue growth,
margin expansion and
better working capital
movement to improve
operating leverage and
return ratios
RoCE
21
18
15
12
9
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
RoE
10 June 2014
4

Sintex Industries
Trading at sub-median P/E (x)…
Despite recent run-up in
stock price, we see the
stock trading at 5.9/4.7x
FY16/17E EPS, 0.7/0.6x
FY16/17E BV and 5.4x/4.2x
FY16/17 EV/EBITDA, which
are below historical average
valuation
28
21
14
7
0
10.5
10.5
1.5
7.4
P/E (x)
Avg(x)
Peak(x)
Min(x)
Median(x) 25.9
…EV/EBITDA, and…
We value SINT at 6.5x (LT-
average) FY16E EV/EBITDA
at INR150/share, while
adjusting for potential
dilution of ~27%, we set
target price at
INR127/share (upside of
24%)
14
10
6.2
6
2
4.1
6.8
6.0
EV/EBDITA(x)
Peak(x)
12.0
Avg(x)
Median(x)
Min(x)
…much lower valuation on P/B
5.0
4.0
3.0
2.0
1.0
0.0
1.7
0.2
1.7
0.8
P/B (x)
Avg(x)
Peak(x)
Min(x)
4.7
Median(x)
10 June 2014
5

Financials and valuation
Income statement
Y/E March
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Min. Int. & Assoc. Share
Adj Cons PAT
2012
44,535
-0.7
7,177
16.1
1,678
5,499
1,358
505
-466
4,179
1,160
27.7
3,019
3,535
-22.4
-49
2,921
2013
51,079
14.7
7,695
15.1
2,054
5,641
1,726
860
-903
3,871
669
17.3
3,202
4,141
17.2
-36
3,130
2014
58,645
14.8
9,642
16.4
2,548
7,094
2,894
774
-161
4,814
1,180
24.5
3,634
3,808
-8.1
13
3,660
2015E
68,387
16.6
11,281
16.5
3,088
8,193
2,995
400
400
5,998
1,400
23.3
4,599
4,214
10.7
15
4,629
Sintex Industries
(INR Million)
2016E
80,349
17.5
14,973
18.6
3,937
11,037
3,299
350
100
8,188
2,426
29.6
5,762
5,682
34.8
20
5,802
2017E
93,461
16.3
18,334
19.6
4,415
13,919
3,400
550
0
11,068
3,321
30.0
7,748
7,773
36.8
25
7,798
Balance sheet
Y/E March
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2012
271
26,212
26,483
30,913
2,381
59,778
37,266
10,863
26,403
2,531
1,423
37,350
3,955
16,983
7,206
9,206
10,108
6,514
3,594
27,242
59,778
2013
311
30,939
31,250
37,139
2,878
71,267
42,326
13,332
28,995
3,597
1,303
45,003
4,531
18,596
8,902
12,974
9,787
8,504
1,284
35,216
71,268
2014
311
35,127
35,438
40,630
3,289
79,358
50,323
15,879
34,444
9,000
3,058
48,559
4,511
22,230
2,720
19,099
11,528
10,005
1,523
37,031
85,398
2015E
329
40,304
40,634
52,576
3,289
96,499
68,323
18,967
49,356
3,000
1,058
55,487
5,213
24,732
2,122
23,420
14,268
12,516
1,751
41,219
96,499
(INR Million)
2016E
2017E
329
329
45,817
53,321
46,146
53,650
52,576
52,576
3,289
3,289
102,011 109,515
73,823
80,323
22,903
27,318
50,920
53,005
3,000
3,000
1,058
1,058
62,407
71,428
5,428
5,563
27,517
31,495
4,146
7,484
25,316
26,886
17,238
20,840
15,224
18,525
2,014
2,316
45,169
50,588
102,011 109,515
E: MOSL Estimates
10 June 2014
6

Financials and valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2012
13.0
17.5
97.7
0.7
6.7
7.7
5.7
1.0
1.1
6.9
0.6
14.0
11.0
0.8
139.2
32.4
63.6
0.8
2013
13.3
17.0
100.4
0.7
7.8
7.6
5.9
1.0
1.1
7.6
0.7
14.3
10.3
0.8
132.9
32.4
71.5
0.9
2014
12.2
19.9
113.9
0.7
7.0
8.2
5.1
0.9
1.1
6.9
0.7
11.4
10.9
0.7
138.4
28.1
74.5
1.0
2015E
12.8
23.4
123.3
0.7
5.8
7.9
4.3
0.8
1.2
7.3
0.7
11.1
10.2
0.8
132.0
27.8
80.0
1.2
Sintex Industries
2016E
17.2
29.5
140.1
0.7
7.0
5.8
3.4
0.7
1.0
5.4
0.7
13.1
11.9
0.8
125.0
24.7
85.0
1.0
2017E
21.8
34.1
162.8
0.7
7.0
4.6
2.9
0.6
0.8
4.2
0.7
14.4
13.0
0.9
123.0
21.7
90.0
0.8
Cash flow statement
Y/E March
OP/(Loss) before Tax
Depreciation
Others
Interest
Direct Taxes Paid
(Inc)/Dec in Wkg Cap
CF from Op. Activity
(Inc)/Dec in FA & CWIP
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2012
4,596
1,678
0
1,358
-1,160
-6,888
-882
-5,766
2,352
0
-3,414
-297
3,178
-1,358
-205
1,641
-2,655
9,861
7,206
2013
4,738
2,054
0
1,726
-669
-6,278
668
-5,690
120
0
-5,570
1,855
6,226
-1,726
-254
6,597
1,695
7,206
8,901
2014
4,962
2,548
0
2,894
-1,180
-7,997
1,065
-7,067
-1,755
0
-8,822
821
3,492
-2,894
-254
1,576
-6,181
8,902
2,721
2015E
5,583
3,088
0
2,995
-1,400
-4,786
5,880
-18,041
2,000
0
-16,041
881
11,946
-2,995
-269
9,562
-598
2,720
2,122
(INR Million)
2016E
2017E
8,068
11,043
3,937
4,415
0
0
3,299
3,400
-2,426
-3,321
-1,925
-2,081
11,052
13,457
-5,500
-6,500
0
0
0
0
-5,500
-6,500
40
50
0
0
-3,299
-3,400
-269
-269
-3,528
-3,619
2,025
3,338
2,122
4,146
4,146
7,484
E: MOSL Estimates
10 June 2014
7

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Sintex Industries
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SINTEX INDUSTRIES LTD
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No
No
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Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
For Singapore
Motilal Oswal Securities Ltd
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
10 June 2014
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