Sintex Inds

The stock tanked over 4% on Friday after it reported a set of disappointing numbers for Q1FY14. QoQ, the numbers are down while YoY, they are just about OK. YoY, on a consolidated basis, the company posted a net sales of Rs.1124 crore, up 4%. Higher interest outgo and operating expenses left a very flat net profit at Rs.47 crore, same as in Q1FY13. QoQ, net profit was down 69% and the decline in topline was at 19%. The gratifying part of the numbers is that its forex loss is now contained at around Rs.4 crore levels in current Q1 compared to Rs.12 crore in Q4 and Rs.29 crore in Q1FY13. In march’13, the company had redeemed FCCBs worth $292 million and given the rupee depreciation, this is indeed proven to be a great move. This helped it reduce the net debt from Rs.2400 crore to Rs.800 crore. Gping ahead, its cash flow is only expected to improve as times improve.

In terms of segment-wise breakup, prefabricated structures, on a YoY, grew 19% though monolithic construction fell 13%. In custom moulding, Indian operations declined 16% while overseas grew 23%. Tanks showed a growth of 18% and textiles, showed a growth of 1%. In fact the company first began as a textiles unit and later its other units became much larger. The company is looking back at its roots and is considering a much bigger foray into textiles and is looking at putting up 3 lakh spindles in Gujarat under the Gujarat Textile Policy 2012. It has already made plans to hike up capacity to 10 lakh spindles on a five year time horizon. No details are out yet about how it plans to fund this and whether till would get spun off into a separate unit.