Sofia Martinez
Sintex Plastics Technology Ltd. (SPTL) is a company that operates in the plastics industry, specifically in retail plastics and auto and defence plastics. In recent years, the company has been going through a turnaround initiative funded by KKR, which invested ₹1,250 crore in Sintex-BAPL, a subsidiary of Sintex Plastics. While Sintex Plastics has seen an increase in net sales, with its consolidated net sales for December 2022 up 5.06% year-over-year, the company also faces challenges, including declining cash flow and high debt levels. Analysts have advised investors to be cautious about investing in the company due to business risks and the promoters' decision not to exercise their right of conversion of warrants. Despite these concerns, Sintex Plastics' share price has been increasing, and the company's stock performance has been the topic of discussion and analysis in the financial world.
| Characteristics | Values |
|---|---|
| KKR investment in subsidiary Sintex-BAPL | Rs 1,250 crore |
| Sintex Industries net profit | Rs 35.07 crore |
| Sintex Industries net sales | Rs 687.56 crore |
| Sintex Industries share trading price | Rs 35.95 |
| Sintex Industries 52-week high | Rs 38.55 |
| Sintex Industries 52-week low | Rs 17.75 |
| Sintex Plastics Consolidated December 2022 Net Sales | Rs 248.29 crore |
| Sintex Plastics Standalone December 2022 Net Sales | Rs 0.61 crore |
| Sintex Plastics Consolidated September 2022 Net Sales | Rs 274.65 crore |
| Sintex Plastics Standalone September 2022 Net Sales | Rs 0.79 crore |
| Sintex Plastics Technology Ltd. price target in 14 days | 1.176 INR upside and 0.911 INR downside |
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What You'll Learn
KKR's investment in Sintex-BAPL
Sintex-BAPL, a subsidiary of Sintex Plastics, received a structured credit commitment of Rs 1,250 crore ($185.7 million) from Kohlberg Kravis Roberts & Co. (KKR) in 2022. Sintex-BAPL intended to use the funding to refinance existing debt and expand its business-to-consumer (B2C) vertical for plastic products. With the investment, Sintex-BAPL replaced short-term debt with long-term debt.
Sintex-BAPL, headquartered in Gujarat, manufactures injection-moulded plastic components for the automotive industry. It has seven manufacturing facilities across India and was founded in 2007. The company has 983 employees as of 2025.
KKR is a global private equity (PE) giant that lends in India through its two credit arms: KKR India Financial Services Pvt Ltd and KKR India Asset Finance Pvt Ltd. However, KKR's lending books have faced challenges due to the turmoil in the Indian NBFC sector. Several of KKR's investments in India have turned sour, with companies like Kwality Dairy, CG Power, and Coffee Day Enterprises defaulting on their debt obligations.
Despite the challenges faced by KKR in India, the firm remains committed to the market. KKR is looking to change the way it approaches debt transactions in the country to safeguard its investments and protect itself from fraudulent promoters and poor governance.
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Sintex Industries' net profit increase
Sintex Industries is a company primarily engaged in the manufacturing and sale of textiles and yarns. The company has a market cap of ₹ 138 Cr and has delivered a poor sales growth of 9.75% over the past five years.
In March of last year, the company allotted 66.7 million fully convertible warrants to promoters, which could be converted into equity shares at any time within 18 months for cash at ₹ 90 per warrant. However, the promoters decided not to opt for the conversion due to a sharp fall in the stock price.
Despite this, Sintex Industries' stock price has been increasing. This could be attributed to the company's efforts to refinance debt and finance growth in the B2C business in retail plastics and auto and defence plastics. KKR, a subsidiary of Sintex Industries, received an investment of ₹1,250 crore from KKR for this purpose.
However, analysts advise investors to be wary of Sintex Plastics due to declining cash flow and high debt levels, which have increased business risks. The stock has lost 93% since its listing on August 8, 2017, and declined 10% to ₹9.05 on a particular Friday.
While the company's net profit increase has led to a rise in its share price, investors should carefully consider the risks associated with high debt levels and declining cash flow before making any investment decisions.
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Analysts' warnings about high debt levels
Analysts have warned about the high debt levels of Sintex Plastics Technology Ltd. (SPTL), advising investors to be cautious. SPTL has experienced declining cash flow, with a significant drop in revenue and profit in recent years. The company's total debt stood at ₹3,872 crore as of March 31, 2018, and its debt levels have continued to rise.
In 2019, SPTL's subsidiary, Sintex Industries, defaulted on ₹86 crore of debt. SPTL's revenue fell to ₹4,774 crore in fiscal 2019, a decline from the previous year, and its profit decreased to ₹94.5 crore. The company's debt coverage indicators during FY19 were weak, and its net debt increased to ₹5,871 crore in FY19.
SPTL has also faced challenges with its turnaround initiatives. In 2022, the promoters did not exercise their right to convert warrants, and the company defaulted on repayment commitments at Sintex Industries. This led to a decline in the stock price, with analysts questioning the business's future prospects.
Artificial intelligence (AI) stock analysts have predicted a negative trend for SPTL shares, recommending that investors look for other projects. SPTL's stock price predictions for the short and long term vary, but the overall outlook is negative.
While SPTL has taken steps to address its debt, such as raising funds from private equity, analysts remain concerned about the company's ability to manage its high debt levels effectively. The management aims to reduce debt/EBITDA to more comfortable levels, but analysts are skeptical, highlighting the increased business risks associated with declining cash flow and high debt.
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SPTL stock price predictions
According to MunafaSutra.com's AI prediction, SPTL's share price movement appeared strongly bullish, indicating a positive sentiment that could lead to a continued upward trend. However, another source, WalletInvestor.com, predicts a negative trend, advising investors to look elsewhere due to the high-risk nature of the stock.
SPTL's stock price has experienced volatility, with a sharp fall in the past leading promoters to opt out of converting warrants to equity shares. Analysts have expressed concerns about the company's high debt levels and declining cash flow, impacting investors' confidence in the stock.
In the short term, SPTL's price target within 14 days is predicted to be 1.176 INR on the upside and 0.911 INR on the downside. However, WalletInvestor.com's forecast suggests a potential decline to 0.000001 INR.
Looking at a longer-term horizon, WalletInvestor.com maintains its pessimistic outlook, classifying SPTL as a bad, high-risk 1-year investment option. On the other hand, some analysts attribute SPTL's decline to factors like rising treasury yields and inflation, suggesting that easing inflation and a weakening economy could lead to a rebound in the stock.
It is important to note that stock price predictions are inherently uncertain, and investors should conduct their own due diligence before making investment decisions.
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Sintex Industries' net sales increase
Sintex Industries Ltd has two divisions: textiles and plastics. The company has been a pioneer in high-value fabrics, and its plastics division is one of the most diversified in the world in terms of manufacturing capabilities. Sintex manufactures a wide range of plastic products catering to various segments, including construction, interiors, industries, and consumers.
Sintex Industries' net sales have seen an increase in recent years. In 2018, net sales were at 2,035.76 Cr, and they increased to 2,820.77 Cr in 2019. However, there was a decline in 2020, with net sales dropping to 1,634.92 Cr. The company saw a slight increase in 2021, with net sales of 1,689.15 Cr, and a significant jump in 2022, with net sales of 3,126.50 Cr.
Sintex Industries Ltd.'s stock is currently available at an attractive price, and it has entered its Strong BUY zone. However, experts advise investors with a low-risk appetite to refrain from investing in the stock due to certain concerns. One of the concerns is the company's high debt levels, which have contributed to declining cash flow and increased business risks, according to analysts.
Despite these warnings, there have been some positive signs for the company. In 2022, Sintex Industries Ltd. reported an increase in net sales. The Consolidated June 2022 Net Sales were at Rs 886.98 crore, up 87.25% year-over-year. The Standalone September 2022 Net Sales were Rs 654.65 crore, up 1.59% year-over-year, and the Consolidated September 2022 Net Sales were Rs 692.16 crore, up 12.57% year-over-year.
The increase in net sales for Sintex Industries can be attributed to the performance of its various business segments. The company's plastics business is dominated by Pre-fabricated Structures, Custom Molding, and the Monolithic Construction segments. While the Monolithic segment has led to an increase in working capital days, it still contributes positively to the top line. The Pre-fab and Custom Molding segments are also doing well.
In conclusion, Sintex Industries has seen an increase in net sales, contributing to the rise in its share price. However, investors should carefully consider the risks associated with the company's high debt levels and make investment decisions based on their risk appetite and expert advice.
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Frequently asked questions
Sintex Plastic's share price is going up due to an increase in net sales. In December 2022, the company reported a 5.06% increase in consolidated net sales year-on-year, and a 177.27% increase in standalone net sales year-on-year.
Analysts advise investors to be wary of Sintex Plastics Technology Ltd. due to declining cash flow, high debt levels, and business risks. The company has also lost 93% of its value since its listing in 2017. However, there has been a recent uptick in share prices, with a 7% increase in Sintex Industries' share price ahead of the listing of its plastic division.
The current share price of Sintex Plastics Technology Ltd. is 1.050 INR.
The predicted share price of Sintex Plastics Technology Ltd. in 14 days has an upside of 1.176 INR and a downside of 0.911 INR.
