Stock Review: Sintex Industries

THE performance of the Gujarat-based plastic products producer, Sintex Industries, in the September 2010 quarter has been its best quarterly performance in the last couple of years. Its net profit for the September quarter jumped 72% to 100.2 crore on a consolidated basis. A strong performance of its subsidiaries boosted its plastics division, while its technical textiles division, too, continued to do well. The net profits of the company's subsidiaries jumped 2.6 times during the September 2010 quarter to 26.7 crore. In comparison, the company's standalone net profit grew only 56% to 73.4 crore. Apart from the improved performance by the subsidiaries, the company also gained from the multifold jump in other income to 27.2 crore as against Rs4.8 crore in the year-ago period. A fall in the effective rate of tax also added to the profit growth. For the September 2010 quarter, the company provided for tax at 26.6% of pre-tax profits, as against 29.4% in the corresponding quarter of last year. The revival in its textiles business added lustre to the company's quarterly results. The technical textiles business, which saw a steep fall in profits during FY10 after stagnating for three previous year, nearly quadrupled its profits to 12.9 crore in the September 2010 quarter. The plastics segment, too, reported a strong 48.8% jump in profits to 138.4 crore, while the sales grew only 29.6%.

   Under its plastic products segment, the monolithic construction business continues to grow at a fast pace with sales more than tripling in the last four years. The company carries a 2,600-crore order book to be executed by FY12. Similarly, in the prefabricated structures segment, the company is planning to grow through geographical expansion from its five plants across the country.

   The company's scrip, which had gained nearly 15% in the last one month, rose 1.3% on Monday after the results were published — higher than the 0.35% rise in the Sensex. Considering these results, the earnings of the company now stand higher at 28.6 per share. The current market price of 434 is around 15.2 times the EPS, which appears fairly attractive considering the healthy growth prospects