Buy Sintex Industries, target of Rs 112: Emkay Global

Emkay Global Financial Services has maintained its buy rating on Sintex Industries with a target price of Rs 112 in its March 2, 2009 research report.
"The current economic situation has prompted us to re-visit our earnings estimates for Sintex. We expect stumbling blocks in key business interests including monolithic construction, important growth driver for Sintex. Consequently, we have revised our assumptions for FY08-FY11E and factored- 1) lower revenue CAGR of 68% in the monolithic construction vertical versus earlier CAGR of 93%, 2) 8% revenue CAGR in standalone custom molding vertical versus 30% CAGR earlier, 3) 25% revenue CAGR in standalone prefabs vertical versus 36% CAGR earlier and 4) 29% decline in net profit of subsidiaries versus 64% CAGR earlier. The overall impact on consolidated earnings is 13% (Rs 23.7), -19% (Rs 24.8) and -26% (Rs 29.6) for FY09E, FY10E and FY11E respectively."
"We expect revised earnings CAGR of 23% during FY08-FY11E. At CMP of Rs 88, the stock is trading at a valuation of 3.5x FY10E earnings and 0.5x FY10E book value - attractive valuations for growth business. Thus in light of strong growth prospects, healthy balance sheet, excellent track record and ROIC of 13%, we maintain ‘BUY’ with a revised target price of Rs 112," says Emkay Global Financial Services' research report.