Sintex Plastics Technology Ltd - Active Thinking

CMP = 62

Sintex Plastic Technology Limited (SPTL) is a globally respected conglomerate with interests across building materials and custom mouldings. SPTL entered the water storage tanks manufacturing space in the 1970s and later diversified into the custom moulded electricals space through the production of SMC products, also leveraged its plastics expertise to enter the building construction space through prefabricated structures as well as full-fledged monolithic buildings.



https://youtu.be/7O1gHDiHdNA

Sintex  is world's largest plastic water tanks  manufacturer and the market leader in plastic prefab (schools, low budget housing, defence, civil construction, temporary shelters and retail products). Its strong distribution network, brand value and a strong product portfolio of about 3,500 products are its key strengths. SPTL has a diversified presence across products, end markets and geographies with 36 manufacturing facilities spread across India, Europe, North Africa and USA.  

The Company has two business operations  

Plastic - Water Tanks, Doors, Windows, Prefab, Sections, BT Shelters, Auto components, Custom Moulding (Composite Plastics and retail products) Indian operations being managed by Sintex-BAPL Ltd.  The custom moulding is further segregated into global operations through its subsidiaries Sintex NP SAS (Europe) and Sintex Wausaukee Composites Inc (US).

Infrastructure - Affordable Housing and EPC Contract. Prefabricated units & EPC contracts for  various infrastructure projects across the country (under its subsidiary Sintex Prefab and Infra Ltd.). 

Product Range and Application

http://www.sintex-plastics.com/wp-content/uploads/2017/04/ProductCatalogue2017.pdf

Water Storage Solutions

https://youtu.be/rwu98mjIJss

The Sintex  brand has become synonymous with water storage tanks. Having  pioneered the concept of plastic water storage solution more  than three decades ago, the company enjoys leadership position in water storage tank segment with more than a 60% market share. 


https://youtu.be/g8avuv5f-sU


The company leveraged its expertise in the liquid storage solutions in septic tanks, packaged treatment solutions and biogas holders to create these products which are becoming increasingly relevant considering the rapid rates of urbanisation across India.

Building and Interiors

https://youtu.be/tY_2G_TzC6U

SPTL capitalised on its plastic processing expertise on housing solutions with product like doors, kitchen cabinets, interior panels and non-load bearing partitions. These products are environment-friendly and alternatives of wooden & aluminium products variants in addition to being cost-efficient, zero-maintenance, easy-to-clean and  water - termite proof. 

Environmental and Green Solutions

https://youtu.be/S6bWHKbjsTU

Central Government’s drive to clean up India has increased awareness of the waste management. These product range of dustbins  and containers has resulted in growing its acceptance across states, companies, municipal corporation, shops and in domestic use. 

Electrical and SMC products

The key products in this segment include  junction boxes, RTU, SMC Sheet/CHQ, IP, LED, MCB/RCCB, cable trays and Plug & Socket, Sintex introduced tamper-proof meter boxes, manufactured using sheet molded compounds. Being shockproof, SMCs provide insulation against electricity and are used as cast iron and aluminium alternatives. They are also rust-proof, durable and possess zero-resale value, protecting them from theft. SPTL is one of the largest manufacturers of electrical enclosures, catering to state electricity boards and circle offices pan-India. 

Industrial Products

https://youtu.be/wq-UORgVUEI

Industrial containers are specially moulded tanks to store dyes, colours and chemicals for industrial uses. These are mainly large but come in multiple sizes to suit diverse uses. Company has developed high-strength, non-reactant FRP tanks for storing corrosive chemicals and fuels in dispensing stations as a cost-effective and fail-safe alternative to RCC and metal variants. Plastic pallets cater to industries like pharmaceuticals, automotive, electrical, warehousing, transportation, among others. Sandwich panel has emerged as a modern building material  replacing the traditional brick and mortar structures for numerous applications. 

Automotive components

It caters to players present in the car manufacturing, electrical /electromechanical equipment manufacturing, , household appliances, medical, construction, sport and leisure sectors, among others. The product basket comprises exterior systems, interior systems, under-the-hood systems and plastic components. Sintex-BAPL specialised in manufacturing injection moulded plastic components for the auto industry. It employs cutting-edge technologies like vacuum forming, PU foaming, ultrasonic and hot plate welding, spray painting, decorative painting and assembly to manufacture best-in-class products for OEMs namely Hyundai Motors, Honda,  Scooters & Motorcycles, Toyota , Ashok Leyland, TVS Motors, TAFE etc

In international operation, Sintex Wausaukee and Sintex NP are preferred supplier to globally recognised OEMs in the US  and Europe (majority Fortune 500 companies) on account of its expertise in manufacturing highly engineered composite, fibre-glass components ,  stamping thermoplastic composite grades commonly used in aeronautics,  construction equipment, agriculture, medical injecting and mass transit. The Group’s key clients comprise Caterpillar, Siemens, Alstom, Phillips Medical Systems, G.E. Medical Systems, Rail Plan International Inc., Acciona, Hitachi, NY City Subway Faurecia, Schneider, Legrand, ABB, Areva, EADS, Siemens, Snecma, ThyssenKrupp Automotive, Valeo, Visteon, Alstom and  General Motors, Toshiba and Harley-Davidson, among others.

Prefabricated Structures

Prefabricated structures are ready to fix panels and frames that can be assembled at the clients site within short period. These structures making it the one of the fastest and most cost-effective construction solutions and preferred solution towards strengthening social infrastructure comprising toilet blocks, mid-day meal kitchens, health-care centres, classrooms and hostels, police stations, labour camps and army shelters, etc. 

Infrastructure & EPC contracts

Sintex Prefab and Infra is pioneer in monolithic construction technology in India and one of the leading companies for monolithic construction for low cost housing typically suited for affordable housing projects for addressing the national housing shortage. Company provides prefabricated solutions and undertakes EPC contracts for various infrastructure projects across India. It is mostly apartment affordable housing project under government and PPP model. 

Investment Rationale

Global economic growth is generally interlinked to plastic consumption in most of the advanced economies. Average per capita plastic  consumption of the world is 28 kg whereas India’s 11 kg (lowest in Asia) and China 38 kg, Brazil 32 kgs. The per capita plastic  consumption for US, Germany, UK, Italy, Spain, Australia, Japan, Korea and Taiwan is more than 100 kg. This clearly  shows that India has huge growth potential. With plastic products becoming increasingly ubiquitous across household and industrial applications, the per capita consumption of plastic in India is expected to touch 20 kgs by 2020 from about 11 kgs currently.

The use of composite plastics is rapidly increasing to replace metal parts in auto components as it helps in around 60% weight reduction and improve fuel efficiency. Custom-moulded components are made from new-age  composites (combining plastics and fibers with glass, carbon, and other materials). It find wide application in aerospace, electric cars, mass transportation (metro), renewable energy and defence sector players. These products enjoy steady demand because of their strength, tenacity, thermal and electrical conductivity and corrosion resistance. 

Sintex Plastics business is direct beneficiary of housing and infra boom. Indian Government  is laying a keen emphasis on improving its infrastructure, transportation, railways, roads, airports, sewage treatment, housing, electricity transmission and distribution.

Sintex Plastic is among top companies in the world for custom moulding products and solutions for plastics and composite materials. The Company has a global geographical presence with operation in 9 countries and 4 continents. It has a diversified presence across products, end markets and geographies with 36 manufacturing facilities spread across India, Europe, North Africa and USA.  has a rich and diversified client base with none of the customers accounting for more than 5% of the total revenue. 

Most of the major capax is already done and average capacity utilisation around 60% across product segments. In next 2 -3 years no capex required till capacity utilization improves upto 85-95%

The company is having very strong technological capabilities and global manufacturing footprint with several latest technology  tie-up with world leading companies. It will keeps the company well ahead competitors and gives clear visibility of future growth. 

• It has developed the decentralised packaged wastewater treatment solution in collaboration with Aqua Nishihara, Japan – global leaders in this space. 

• Company has received MES approval from ENC office for MBBR technology. This approval is expected to be an inflection point for this revenue vertical as the MBBR technology is widely accepted all over the country. This approval will allow the company to participate in large government projects initiated by MES, CPWD, Railway, ONGC, Police Housing, Housing Boards and other Government and private sector institutions. 

• Company has developed high-strength non-reactant FRP tanks for storing corrosive chemicals and fuels in dispensing stations as a cost-effective and fail-safe alternative to RCC and metal variants. The Group has received approvals from leading oil marketing companies namely IOC HPCL and BPCL for installation in new dispensing stations pan-India.

• Capability-enhancing alliances in the area of product design (HIVEC, Japan), interior and exterior design and engineering (Daeji Metal Corp, Korea), design and manufacture of air induction systems and DFT design and development (Kautex) has served Sintex-BAPL 

SPTL’s business model is favorably poised with macroeconomic scenario and government’s investment plans in infrastructure. Both the segments will have consistent growth in revenues going forward with initiatives like the Swachh Bharat Abhiyan, Sarva Shiksha Abhiyan and the Clean Ganga Mission, toilet blocks, kitchens, health centres, classrooms and hostels, defense shelters, police chowkis, site offices are the key drivers.

Promoters have bought 60 lakh shares around Rs 75 - 85 from open market since its listing in August 2017. Recently company has allotted  6,67,00,000 preferential shares to the promoter at the price of Rs. 90/- per shares, aggregating upto Rs. 600.30 crores to pay the debt. It will increase the shareholding of promoters from 29.81% to 36.93%

Conclusion 

'Sintex' is very strong brand name in Indian household and become synonymous for water storage tanks. Company offers one of the widest plastic-based solutions in the global plastic processing space  from creating housing units to small components. SPTL is the only Indian plastic processing company with pan India presence and enjoys an early-mover advantage in the different businesses segments with huge growth potential.


We have received lot of comments in blog about Sintex Plastic since its listing around Rs 136 in August 2017. Stock price was under pressure from last 4-5 months due to conversion of  FCCBs into 3.91 crores shares. Recent market correction has brought it into our buying range and  given very good opportunity to buy the stock at deep discount, even promoter have bought the preferential issue @ Rs 90 which is almost 50% above cmp.

Sintex Plastic stock at cmp Rs 62 is very good investment opportunity for both short  term and long term ( 1 year to 4 years ). It can be bought + / - 10% from cmp with 10 -20% of portfolio allocation.