Recommendation: Buy
Current price: Rs 286 (at the time of publishing this tip)
Price target: Rs 400
Key points:
- Sintex Industries, known for its water tanks, has pioneered the concept of monolithic construction in India and is the market leader in this segment. The business of monolithic structures, used in low-cost housing, is expected to drive Sintex’ revenue growth in future, on the back of the rising need for affordable and mass housing in India. This business division currently has orders of close to Rs 1,400 crore and its revenues are estimated to grow at a CAGR of 98% over FY2008-10E.
- Sintex has acquired five companies since May 2006, spread across geographies and catering to niche markets. These acquisitions have been timely and would help Sintex to absorb latest technologies as well as expand its reach and customer base in the composite plastic business. The integration of all these companies can lead to substantial benefits in terms of leveraging of the acquired assets and expansion of the client base.
- Sintex’ pre-fabricated products are gaining fast acceptance in the country. There is a huge demand for these products which are increasingly finding use in primary school buildings, toilets and telecom tower shelters. Logistics remain a key to success here. Sintex is also increasing its prefabs capacity to 100,000 sq ft per day. The business is expected to grow at a CAGR of 45% over FY2008-10E.
- At the current market price of Rs 286, the stock is attractive, the company’s EPS is estimated to grow at a CAGR of 34.7% over FY2008-10.
- I recommend Buy call on this stock with a price target of Rs 400.
