Stock Review: SINTEX INDUSTRIES

Sustained and non-cyclical rise in government social spending in India will lay the foundation for strong future growth for Sintex Industries. Its monolithic and prefab segments, that derive 30 per cent revenues from government orders, thus enjoy strong revenue visibility. Further, the custom moulding business should benefit from a pick-up in the industrial cycle and synergies from its acquisitions in the medium term. A sharp dip in working capital requirement in 2010-11 (by almost 40 per cent as a percentage of sales), along with divestment of unrelated investments (oil &gas) has addressed key concerns. Analysts believe strong growth prospects, a leaner balance sheet and attractive valuations are key positives of the stock.