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May 27, 2017 | PM Securities
Sintex Textiles Industries smoothly sustained the demonetization. Q3 turned out to be the best quarter for textiles. Q4 was comparatively slow due to raw material prices.
Textile yarn production has started since last 7 months and is ramping up to 96% utilization (Current utilization is 86%.)
Sintex yarn for phase 1 should have 1,400cr of top line and 17-21% of EBIDTA margin whereas phase will have about 1750cr top line with 22-23% of EBIDTA margin. Asset turnover ratio will be 1:1. IRR is expected to be 12%
Phase 1 Revenue and EBIDTA: Revenue EBIDTA YOY 900cr 19% Q4 275cr 17%
Phase 2 of Sintex yarn will go live in June end 2017 and will take about 12 months to achieve the capacity of 96% utilization.
Phase 2 has come up with specialised yarn which will produce unique boutique products (higher margin and difficult to sell) and phase 1 was more of commodity yarn.
Phase 2 will have a commissioning date of June 2017 and 5 years for incentives from that date. Post this the interest rates will go up but the company’s expects a lot of repayments.
China, Vietnam and Indonesia are losing their market share whereas India is gaining an edge over it due its competitive prices.
Exchange rate are affecting exports or Sintex yarn, Exports currently are at 65% of the sales.
Consolidated debt of Sintex yarn and industries is 4,100cr (gross) and 3,400cr (net).
Expected debt for 2018-201 9is 4,100cr (net debt).
CAPEX expected is 2,400cr which is under WIP and would get capitalized in a block manner in 2017-18.
Cash outgo for CAPEX for 17-18 will be 1,100cr and for 19 will be 400cr
A budget of 50cr is set for development of clothes for international departmental’s. Marketing will take place 18 months before.
Cotton results have been extremely strong (20-21% growth in USA and 24% growth in India) and therefore prices are at the peak right now and will go down in future.
FCCB is a joint liability from SIL and SPTL. About 45mn FCCB have been converted out of 110 mn. They are expecting that most of the FCCB should get converted to equities in 2017-18.
With regards to receivables, the company expects about 120 days in textile.
The company had purchased land for 1 mn spindle (original plant). It has now reduced to 600,000 spindles.
Working Capital target would be 120 days.
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