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ATS Research Desk

Company Name – Sintex Industries

FUNDAMENTAL REPORT

ATS Wealth Managers Pvt Ltd.

Company Profile Incepted In the year 1931, Sintex Industries marks its presence as being

pioneer in the field of custom molding and textiles. Its wide range of products caters to various

segments like construction, interiors, industries and consumers. Company manufactures a range

of high quality yarns.

Investment Rationale

1.Diversified Product Range:

2.Increase Government spending on social welfare

schemes:

3.In-house Availability of Plastic foam work:

4.Indian Government Initiatives for the textile segment

5.Wide distribution network along with global footprint.

.

Financial Summary – Consolidated

Outlook: Overall outlook for medium to long term is bullish for the company . Sintex has

showed CAGR of 14.9% in sales from FY12 to FY16. Net profit recorded in 2016 was 18% high

in comparison to 2015.Growing demand of prefabs, monoliths and custom molding has

contributed to sales factor in FY2016. Innovative ideas and solutions offered through Sintex

products, along with its diversified customer base gives a positive outlook for the company.

CMP as on 6/2/2017 95 52 Week High/Low 95/62.4 Market Cap (Cr) 4899.70 Equity Capital (Cr) 44.66 Face Value 1 Share Holding Pattern Promoters &Promoters Group Holding (%)

32.47

Public Holding (%) 67.53 Grand Total 100

Valuation Summary FY16 FY17E FY18E FY19E

P/E 5.54 5.96 3.98 3.05

EV/EBITDA 6.36 3 2.4 2.0

EV/EBIT 5.07 4 3 2.4

ROCE(%) 10.46% 15.3% 19.4% 24.3%

RONW(%) 12.28% 12.9% 19.3% 25.2%

FY-12 FY-13 FY-14 FY-15 FY-16 FY17E FY18E FY19E

Net Sales 4436.77 5079.44 5842.62 7006.61 7733.53 9280.24 11136.3 13363.5 Operating Profit

721.52 765.10 1025.57 1257.02 1424.82 1794.33 2153.19 2583.83

PAT 306.81 323.75 364.69 528.81 628.44 703.86 1053.66 1376.55 EPS 11.32 11.35 11.72 13.45 14.22 15.76 23.59 30.83


Company Overview: Headquartered in Kalol, Gujarat with 17 manufacturing plants across

the country and 18 plants internationally, Sintex today is a giant corporation with global out

reach. Its presence in 9 countries along with manufacturing of almost 3500+ types of plastic

and related products has ranked Sintex 6th in the industry.

Sintex

Sintex Plastics

Sintex BAPL

Sintex

Infra Projects

Sintex Industries Textiles

17.64% 0.91%

1.4

Revenue From Textile Unit

Cloth Yarn Waste

63.70%

11.59%

5.11%

Revenue from Plastic Unit

Prefab Rotomoulded SMC/Theromoforming

Custom Molding

Prefab

Fabrics

Yarns


Subsidiaries:

Sintex-BAPL LIMITED

BVM overseas Ltd ( Wholly owned subsidiaries of Sintex Industries Ltd )

Sintex Infra Projects Ltd.

Sintex NP SAS Group

Sintex Wausaukee Composites Inc

BVM overseas Ltd (Wholly owned subsidiaries of Sintex Industries Ltd)

Sintex manufactures range of high quality yarns and standard fabrics including metallic yarn,

silk yarn, linen, cupro. Under its Brand BVM, the fabric manufactured at the site is supplied to

several domestic brands.

Domestic Brands Global Fashion labels

In order to cater the diverse needs of its huge customer base, Sintex continuously works on

new innovation and improved quality of the products. Sintex has one of the biggest corduroy

mills in India and with its state of art production facilities Sintex comes with a diversified

range of Yarns.

Sintex Wausaukee Composites Inc (Wholly owned subsidiaries of Sintex Industries Ltd,

incorporated in USA)

The acquisition of Wausaukee composites inc. provides Sintex direct entry to US composite

markets. Sintex with its innovative team plans to explore new areas of wind energy, medical

imaging, therapeutics, tractor and mass transit.

Van Heusen

Arrow

Marks&Spencer

Ann Taylor

DieselArmani

Hugo Boss

Burberry

TommyHilfigerS.oliver


Sintex Plastics

Sintex BAPL Limited:

Sintex Bright Autoplast Pvt Ltd is a 100% subsidiary of Sintex Plastic .BAPL is engaged in the

design and development of auto parts which include:

Instrument panels

Ventilation panels

Pillar trims

Exterior Trims

Hydraulic Reservoir tank

BAPL has 7 manufacturing plants in India .BAPL employs range of plastic technologies to

deliver quality products to its huge customer base.

PrefabWater Tanks

Custom Moulding

Windows

DoorsMonoliths

Infrastructuresegment

HousingEPC(Engineering, Procurement & Construction)

Tata Motor

Maruti

TVS M&M

HyundaiGM

SINTEX BAPL SINTEXINFRA


Technologies Employed by Sintex:

Injection Molding

Gas assist Injection Molding

Blow Molding

Vibration and ultrasonic welding.

Thermoforming

Light resin transfer molding

Prefab:

Sintex Prefab is the most preferred and attractive segment. Prefabs are preferred wherever

local construction is not feasible, delays on account of weather, remote sites. Prefab segment

offers a quick and cost effective solution .Sintex marks its presence of being Asia’s largest

prefab solutions provider.

Some of the key advantage that prefab offers:

Cost effective

Customized solutions

Excellent insulation

Fire proof, water proof

Can be dismantled easily and assembled too.

Prefabs are used for construction of

Readymade offices

Testing labs

Store room

Kitchen

Toilet blocks

Above all prefabs can be customized and can be erected as per the customer requirement.


Sintex Infra Projects Limited: (Wholly owned subsidiaries of Sintex Industries Ltd)

Sintex Infra Projects imparts innovative social infrastructure products and solutions.

Defence Infrastructure solutions

Anganwadi

Midday Meal Kitchens

Mass housing

Water management

Hospitals

Kiosk

Debt –equity ratio in 2016 was 0.97 as compared to 1.07, which gives a good indication about decrease in financial leverage. Sintex repaid 532.6 Cr.debts in FY2016. FCCBs worth US$ 24.15 million were converted into equity which increased the Company’s net worth by 132.73 crore, Sintex current ratio in 2016 was 1.08 as compared to 1.04 in 2015, a positive sign. Inventory turnover ratio in 2016 was 28.66 as compared to 24.71 in 2015 indicating company was in tune with manufacturing and sales of the product.

Key Ratios FY-12 FY-13 FY-14 FY-15 FY-16 Debt-Equity Ratio 1.15 1.14 1.13 1.03 0.97

Current Ratio 1.34 1.20 1.34 1.04 1.08 Turnover Ratio Fixed Assets 1.07 1.14 1.05 0.97 0.79

Inventory 15.01 16.27 17.95 24.71 28.66

Debtors 2.65 2.57 2.61 2.98 3.29 Total Asset Turnover Ratio

0.53 0.56 0.53 0.55 0.55

Interest Cover Ratio 3.93 3.77 2.85 3.7 4.43

EBIDTM (%) 20.23 21.8 24.55 24.23 22.54 EBITM (%) 16.5 17.78 20.38 20.68 18.82 ROCE (%) 9.84 10.15 10.58 11.65 10.46

RONW (%) 11.96 13.08 10.9 12.78 12.28

Payout (%) 7.82 8.25 6.62 6.88 6.02

Sales/Assets (X) 0.79 0.80 0.82 0.82 0.72

Price Earning (P/E) 7.69 4.48 3.75 9.76 5.54

Price/Book Value(P/BV) 0.88 0.46 0.38 1.09 0.62

EV/EBITDA 6.53 5.49 4.96 7.42 6.36 Market Cap/ Sales 0.52 0.28 0.23 0.71 0.44


Industry Overview:

Plastic industry made its presence in the year 1957, by commencing production of Polystyrene.

Global economic development is interlinked to petrochemical consumption and plastic being

one of the major contributor to the segment.

The plastic industry manufactures polymers commonly termed as plastics .In Present scenario

plastic processing industry permeate the entire spectrum of daily use items and cover almost

every sphere of life.

The Indian plastic industry is worth Rs.90,000 Crore that includes processing, machinery and

raw material makes and is growing at a fast pace. The Indian plastic industry comprises of

more than 2000 exporters, employs about 4 million people and comprises over 30,000 units

engaged in producing variety of products using various polymer variants and technologies.

Plastic industry in India is dominated by 85%-90% by small and medium enterprises.

Process in Plastic Industry

Polymer Variants:

Polystyrene

LDPE

PVC

HDPE

Polypropylene

Technologies Employed

Extrusion

Injection Molding

Blow Molding

Roto Molding

•UpstreamManufacturing of Polymers

•DownstreamConversion of

Polymers


Downstream plastic industry is highly fragmented and comprises of micro, small and medium

units. Downstream Plastic Industry is dominated by three segments:

Extrusion process is the most commonly used processes in India and accounts for 60% of total

consumption by downstream plastic industry. Injection molding contributes 25% to the

industry and blow molding accounts to 5% and remaining part is contributed by Roto and

plastic processes.

With a wide array of applications like packaging, automobile, consumer durables, healthcare

etc segment captures a significant market share.

The plastics industry has made a significant contribution to the economic development and

growth of various key sectors in the country such as automotive, construction, electronics,

healthcare, textiles and FMCG, among others.

Plastic products offer cost effective solutions as well as most preferred substitutes for metallic

and wooden variants.

Extrusion

•Films & sheets•Fibres and

Filament Pipes•Conduits and

Profiles•Miscellaneous

Applications

Injection Molding

•Industrail Injection Moudling

•Household Injection Moulding

•Thermoware Moulded Luggage

Blow molding

•Bottles•containers•Toys•Houseware

47%

23%

21%

9%

Region Wise Consumption of Plastic in India

Western Northern Southern Eastern

30%

70%

% of Industry Size

Organized Players Unorganized Players


Petrochemicals Producers in India:

Reliance, Haldia, GAIL, IOCL, OPAL, ONGC, Finolex, Sanmar, Shriram, DCW, Mittal, Bharat

Petroleum.

Key factors that contributes to the Industry Growth:

Accelerating Urbanization

Increase in disposable income

Changing lifestyle

Demand for light weight, durable and water resistant materials as substitute to

traditional variants.

Per capital consumption of plastic in India is 11kg which is far below world average ,

indicating there is huge potential in the industry .

The Indian textiles and apparel industry is expected to grow to a size of US$ 223 billion by 2021, according to a report by Technopak.

Textile Industry:

Indian Textile industry is one of the largest contributors to Nation exports and GDP. India is

the second largest textile exporter, and contributes 5.2% of total global exports.

Key Data Indicators:

Largest exporter of cotton yarn and second largest producer of cotton, producing 36

million bales/annum.

Second largest producer of silk and contributes 18% to world raw silk production.

Second largest fiber producer contributing 13% of total world’s textile fiber.

India is the 4thlargest manufacturer of synthetic fiber/yarns.

Indian textile industry accounts 13% of Nation exports and contributes 6% to Nation

GDP.

Indian textile industry has the second largest manufacturing capacity globally.

0

10

20

30

40

50

60

Engineering Plastic Market Trend

109

65

45

1132

Per Capital Consumption Of Plastic

USA Europe China India Brazil


59% of the World’s loom capacity is contributed by Indian Textile Industry

24% of the world’s spindle capacity is contributed by Indian Textile Industry.

Ease in availability of raw materials such as cotton, wool, silk and jute along with skilled

workforce has positioned India as a global sourcing hub.

Provides employment to 45 million people directly and 60 million indirectly.

Textile Industry organized segment is expected to grow at a CAGR of 13% over a 10

year period as per industry reports.

Textile Industry is fragmented into various segments:

Cotton fiber

Cotton yarns, Fabrics

Man Made Textiles

Garments

Handloom &Handicrafts

Others

Investment Rationale:

Diversified Product Range: Sintex with its large product basket that offers wide variety of

solutions has made its presence in our daily life .Plastic Products owing to their light weight,

durability and easy to install facility has gained acceptability among masses, and consequently able

to tap a big market share. Plastic being an excellent substitute to traditional variants and

availability in wide variety has attracted wider section of people. Sintex gamut of baskets offers

standard as well as customized products to its customers. Its cotton yarn, niche structured yarn and

dyes textiles have gained customers confidence and tapped valuable customer base.

Increase Government spending on social welfare schemes: Government emphasis on some

of the key areas like public housing, education, and textiles has opened wider opportunities for

the prefab’s and monolith construction. Budget 2017 made a promising announcement for

rural development. Increase government spending on these key segments will help the

9%

23%

14%

39%

11% 0

% Contribution to Current Exports

Cotton Fibre Cotton yarns, Fabrics

Man Made Textiles Garments

Handlooms & Handicrafts others

30

32

34

36

38

40

42

2011 2012 2013 2014 2015 2016

Cotton Production

Cotton Production


established players like Sintex to come up with more products to cater this segment. Monolith

segment businessbeingB2G is highly dependent on government projects. Monolith segment

gets 90% of its revenue from government .Monolithic construction is very much suitable for

mass housing, it uses fly ash in construction. Monolithic construction is maintenance-free .New

announcement for rural housing is a positive indication for growth of the segment. Currently

various government schemes running for weaker sections and communities. All such schemes

provide opportunities to tap market share and enhance company’s growth and contribute in

development of country.

In-house Availability of Plastic foam work:

Sintex has in-house manufacturing of plastic foam work for its custom molding segment.

Plastic foam works are best suitable for medium sized projects which constitute 60-100

buildings. Plastic foam work has a very low surface tension, so it doesn’t stick to concrete, so it

can easily be removed and reused ,unlike steel which is difficult to remove and then needs

cleaning too .Plastic foam works can be used 80-100 times. Light weight, easy to handle and

transport, water resistant, easy to assemble and fix as per the requirement are some of the key

features of plastic foam work. The number of repetition is so high making it cheaper substitute

than other variants and lowers production cost too. Polyethylene and other petrochemical

feedstocks for most plastic resins are produced as by –products of oil and natural gas, with oil

prices going down, polymer cost is declining, resulting in lower cost of production.

Indian Government Initiatives for the textile segment:

Indian government has announced number of export promotion policies for the textile sector.

Key initiatives are as under

100% FDI in the Indian textile sector

Subsidies on machinery and infrastructure.

Establishment of SITP (scheme for integrated textile parks), government provides 40%

assistance up to the limit of rupees 40 Cr in creation of infrastructure in the parks.

Tariff concession on new investment for cotton spinning units.

GST will eradicate unorganized players from the sector.

Promotion of “Indian Handloom”, initiative taken by government to promote handloom and its

related products trough social platform and connect youth with this awareness program and

build a strong platform to promote on a larger scale, such movements give boost to the sector.

Sintex being pioneer in manufacturing of high quality yarns and high value fabrics will have

varied opportunities in the coming years.

Under the “Make in India” initiative, varied investment opportunities for foreign companies

and entrepreneurs are available across the entire value chain of synthetic and fiber. Textile

sector is expected to show a CAGR of 16% and expected to reach $31 billion by 2020-2021.


Wide distribution channel along with global footprint:

Sintex with its wide network of 2000 retailers, 1000 distributors /dealers, 14 branch offices

and wide variety of product offerings has made an established name in the industry and in the

country. Its innovative ideas and solutions, customized products have made it the first choice

of varied segments. Sintex has successfully established itself across the 4 continents around

the world including France, Germany, and U.S.A, Its strong presence in the European,

American, African and Asian markets will help to attract more and more export for the

company. Its recent collaboration with Ricardo Rami studio in Milan facilitating creation of

design, collection and marketing of the same would help the company to strengthen its global

presence. Changing needs and continuous growth in the transport industry has created huge

demand for custom mould products and Sintex is an established name in custom molding

products manufacturing and is on consistent path to come up with new and innovative

products to tap big market share from transport industry too. Sintex contributes a portion of

its profit for social upliftment and government initiatives .Government Initiatives like Swach

Bharat abhiyan, Sarva shiksha abhiyan has opened several avenues for Sintex to come up with

new and innovative products that are not only cost effective but comes with easy installation

technique too. Syntax bio toilets is one such example in this direction.


INCOME : FY-12 FY-13 FY-14 FY-15 FY-16

Sales Turnover 4534.18 5212.29 5979.05 7155.16 7910.43

Excise Duty 97.41 132.85 136.43 148.55 176.90

Net sales 4436.77 5079.44 5842.62 7006.61 7733.53 Other income 67.24 114.40 99.28 96.4 133.17

Stock adjustment Total Income 4504.01 5193.84 5941.90 7103.01 7866.70

Expenditure

Cost Of Raw Materials Consumed 2,506.75 2,903.30 3,396.04 4,149.05 4,524.16

Purchases of Stock-in-Trade 79.77 157.38 154.21

160.87

233.01

Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade

-2.32 -39.68 9.84 -6.14 2.57

Employee Benefit Expenses 511.97 590.23 633.05 720.16 747.45

Finance Cost 281.72 283.49 289.38 146.24 135.83

Depreciation And Amortization Expenses

127.93 132.38 139.48 145.88 164.73

Other expenses 639.68 727.16 707.13 800.26 929.01

Total Expenditure 4039.50 4716.40 5444.41 6368.22 7022.75

Profit before Exceptional and Extraordinary Items and Tax

843.95 734.79 497.49 477.44 464.51

Exceptional Items -5.68 -21.79 -16.06 -90.35 -46.64

Profit before Extraordinary Items and Tax

838.27 713 481.43 387.09 417.87

Profit Before Tax 838.27 713 4181.43 387.09 417.87

Current Tax 90.96 78.20 112.10 163.57 188.83 Less: MAT Credit Entitlement 15.05 62.10 39.88 116.81 123.87 Deferred Tax 32.42 49.77 40.98 140.49 146.71

Tax For Earlier Years 7.63 1.06 4.83 -0.92 -0.33

Total Tax Expenses 115.96 66.93 118.03 186.33 211.34

Profit/Loss For The Period 301.91 320.16 363.40 526.67 626.93

Minority Interest (after tax) 0 0 0 0 0.18

Profit/Loss of Associate Company 4.9 3.59 1.29 2.14 1.33

Net Profit after Minority Interest & P/L Associates. Co.

Adjusted Net Profit 306.81 323.75 364.69 528.81 628.44

Basic EPS 11.32 11.38 11.72 14.43 14.22 Diluted EPS 11.32 11.35 11.72 13.45 14.22


Income Statement: Projection

Consolidated Balance Sheet:

FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Net Sales 4436.77 5079.44 5842.62 7006.61 7733.53 9280.24 11136.3 13363.5

COGS 2,584.20 3,021.00 3,560.09 4,303.78 4,759.74 5,568.14 6,681.77 8,018.12 Employee benefit expenses 511.97 590.23 633.05 720.16 747.45 896.94 1,076.33 1,291.59

other expenses 639.68 727.16 707.13 800.26 929.01 1,020.83 1,224.99 1,469.99

EBITDA 700.92 741.05 942.35 1,182.41 1,297.33 1,794.33 2,153.19 2,583.83

DEPRECIATION 167.82 205.37 254.76 260.53 304.83 464.012 470.972 478.037

EBIT 533.10 535.68 687.59 921.88 992.50 1,330.32 1,682.22 2,105.80

INTEREST 135.83 146.24 289.38 283.49 281.72 464.012 487.212 511.573 OTHER INCOME 67.24 114.4 99.28 96.4 133.17 139.204 167.044 200.453

EBT 464.51 503.84 497.49 734.79 843.95 1,005.51 1,362.05 1,794.68

TAX 115.96 66.93 118.03 186.33 211.34 301.653 308.39 418.131

PAT 348.55 436.91 379.46 548.46 632.61 703.86 1,053.66 1,376.55

BASIC EPS 11.32 11.38 11.72 14.43 14.165 15.7603 23.593 30.8228

DILUTED EPS 11.32 11.38 11.72 14.43 14.165 15.7603 23.593 30.8228

FY-12 FY-13 FY-14 FY-15 FY-16

Shareholders’ FUNDS :

Share Capital 27.11 31.12 31.12 42.44 44.66 Reserves Total 2621.18 3065.57 3484.43 4655.32 5465.81 Total Shareholders’ Funds 2648.29 3125.00 3543.86 4697.76 5510.47 Minority Interest 0 0 0 0 2.07 Secured Loans 1246.41 1634.91 2297.33 2976.75 4835.59 Unsecured Loans 26.07 824.61 913.06 204.98 315.21 Total Debt 1272.48 2459.52 3210.39 3181.73 5150.80 Deferred Tax Liabilities 279.15 290.62 335.83 471.91 619.04 Other Liabilities 16.63 146.76 62.34 113.34 39.30 Total Noncurrent Liabilities

1583.19 2912.10 3623.61 3785.06 5831.60

Current Liabilities Short term Borrowings 1682.20 1020.67 608.97 773.68 688.88 Trades Payable 530.83 587.64 822.43 1011.53 960.61


Other Current Liabilities 240.59 368.42 388.74 911.56 823.03 Short term provisions 344.49 94.39 107.92 94.39 344.49 Total Current Liabilities 2798.11 2071.12 1928.06 2824.91 2615.60 Other Equity and Liabilities

0.0 0.0 0.0 0.0 0.0

Total Equity and liability 7029.59 8108.22 9095.53 11307.73 13959.74 Assets Non Current Assets Fixed Assets Tangible Assets 2502.59 2768.10 3494.79 4921.53 7430.28 Intangible Assets 137.67 131.35 120.05 116.06 111.26 Capital Work-in-Progress 253.10 125.50 125.50 231.02 192.91

Intangible assets under development

1.02 0.00 0.00 0.00 0.00

Goodwill on Consolidation 0.00 215.73 186.49 155.05 167.56 Non-Current Investments 66.91 70.50 248.66 250.80 69.20

Deferred Tax Assets (net) 41.01 2.71 6.95 2.53 2.95

Deferred Tax Assets 41.01 2.71 6.95 2.53 2.95

Deferred Tax Liability 0.0 0.0 0.0 0.0 0.0 Long-Term Loans and Advances

176.41 1016.21 1691.95 1727.13 1422.72

Other Non-Current Assets 13.15 23.45 46.66 44.26 49.59

Total Non Current Assets 3408.76 4587.74 5921.05 7448.38 9447.49

Current Assets Current Investments 75.37 59.82 57.13 277.24 195.47 Inventories 395.51 453.10 516.99 516.99 606.39 Trade Receivables 1653.45 1780.59 2078.46 2305.43 2241.79 Cash and Cash Equivalents 890.19 890.19 271.98 425.01 740.86

Short-Term Loans and Advances

744.16 281.22 217.95 223.56 596.81

Other Current Assets 31.73 55.56 97.86 111.12 130.93

Total Current Assets 3620.83 3520.48 3174.48 3859.35 4512.25 Other Assets

Total Assets 7029.59 8108.22 9095.53 11307.73 13959.74


Stock Performance Chart: Buy Sintex : Target :119

Research By: Megha Mohnot Equity Research Analyst ATS Wealth Managers Pvt. Ltd Email: [email protected]

Disclaimer: This Report is only for the information of our customers. Recommendations, opinions

or suggestions are given with the understanding that readers acting on this information assume all

risks involved. The information provided her is not be constructed as an offer to buy or sell

securities of any kind. ATS and/or its group companies do not as assume any responsibility or

liability resulting from the use of such information.

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