Arvind reports 26.5% CAPEX growth and 14.4% Revenue growth

14-05-2015 • About Arvind ($ARVIND) • By InTwits

Arvind reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is relatively stable: 12.7% in FY2015 vs. 13.7% in FY2014 vs. 13.0% in FY2011
Arvind has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.1%. At the same time it's in pair with industry average of 9.4%.
CAPEX is quite volatile: 1,508 in FY2015, 1,894 in FY2014, 3,449 in FY2013, 9,768 in FY2012, 15,571 in FY2011
The company has highly profitable business model: ROIC is at 13.2%
It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is 2.0x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Arvind ($ARVIND) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	40,846	49,251	52,925	68,621	78,514	14.4%
SG&A					1,578
EBITDA	5,300	6,069	7,035	9,383	9,959	6.1%
Net Income	1,649	4,359	2,484	3,539	3,411	-3.6%
Balance Sheet
Cash	334	405	1,609	1,359	686	-49.6%
Short Term Debt	10,941	13,512	14,557	16,465	20,026	21.6%
Long Term Debt	8,945	7,770	10,051	13,455	13,941	3.6%
Cash flow
Capex	2,257	4,638	3,683	4,445	5,623	26.5%
Ratios
Revenue growth	-56.5%	20.6%	7.5%	29.7%	14.4%
EBITDA growth	29.1%	14.5%	15.9%	33.4%	6.1%
EBITDA Margin	13.0%	12.3%	13.3%	13.7%	12.7%	-1.0%
Net Income Margin	4.0%	8.8%	4.7%	5.2%	4.3%	-0.8%
SG&A, % of revenue					2.0%	2.0%
CAPEX, % of revenue	5.5%	9.4%	7.0%	6.5%	7.2%	0.7%
ROIC	9.9%	11.3%	11.2%	13.7%	13.2%	-0.5%
ROE	11.1%	23.4%	11.6%	14.6%	12.9%	-1.8%
Net Debt/EBITDA	3.7x	3.4x	3.3x	3.0x	3.3x	0.3x

Revenue and profitability

Arvind's Revenue jumped on 14.4% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.99 pp from 13.7% to 12.7% in FY2015.

Net Income marign decreased slightly on 0.81 pp from 5.2% to 4.3% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 7.2%. CAPEX/Revenue decreased on 2.3 pp from 9.4% in FY2012 to 7.2% in FY2015. For the last three years the average CAPEX/Revenue was 6.9%.The company invested a big chunk of EBITDA (56.5%) to CAPEX to fuel its growth.

Return on investment

The company operates at good ROIC (13.22%) and ROE (12.86%). ROIC decreased slightly on 0.52 pp from 13.7% to 13.2% in FY2015. ROE decreased slightly on 1.8 pp from 14.6% to 12.9% in FY2015.

Leverage (Debt)

Debt level is 3.3x Net Debt / EBITDA and 3.4x Debt / EBITDA. Net Debt / EBITDA surged on 0.3x from 3.0x to 3.3x in FY2015. Debt jumped on 13.5% in FY2015 while cash dropped on 49.6% in FY2015.

Appendix 1: Peers in Textiles

Below you can find Arvind benchmarking vs. other companies in Textiles industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Olympia Industries ($OLYMPTX)	-99.6%	-58.0%	-96.6%	74,809.1%
Gujarat Cotex ($GUJCOTEX)	625.9%	-6.2%	-66.0%	176.2%
T T ($TTL)	-39.2%	-21.8%	28.7%	47.8%
Filatex India ($FILATEX)	-74.3%	-2.7%	158.7%	44.5%
Gtn Textiles ($GTNTEX)	-27.7%	-8.8%	51.2%	39.4%
Median (73 companies)	-29.2%	4.8%	10.0%	14.2%	3.5%
Arvind ($ARVIND)		20.6%	7.5%	29.7%	14.4%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Ruby Mills ($RUBYMILLS)	25.2%	28.3%	25.1%	28.6%
Vardhman Textiles ($VTL)	24.9%	13.8%	20.1%	24.3%	16.5%
Welspun India ($WELSPUNIND)	13.3%	12.2%	16.8%	22.6%	24.1%
Nitin Spinners ($NITINSPIN)	23.7%	10.5%	19.7%	19.3%	17.0%
Shri Dinesh Mills ($SHRIDINE)	24.7%	22.4%	18.5%	18.7%
Median (53 companies)	12.7%	6.3%	9.5%	9.5%	12.1%
Arvind ($ARVIND)	13.0%	12.3%	13.3%	13.7%	12.7%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jindal Worldwide ($JINDWORLD)	3.6%	3.0%	10.5%	20.7%
SRF ($SRF)	0.0%	0.0%	18.7%	20.0%	11.4%
Welspun India ($WELSPUNIND)	11.3%	5.6%	7.8%	16.4%	10.9%
Sel Manufacturing Company ($SELMCL)	54.2%	53.9%	25.1%	14.0%
Grasim Industries ($GRASIM)	7.8%	17.7%	21.7%	11.6%	10.2%
Median (20 companies)	4.5%	3.0%	5.3%	7.4%	9.5%
Arvind ($ARVIND)	5.5%	9.4%	7.0%	6.5%	7.2%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Nitin Spinners ($NITINSPIN)	13.8%	6.0%	19.5%	21.5%	17.5%
Sutlej Textiles & Industries ($SUTLEJTEX)	16.0%	9.5%	13.6%	19.8%	14.6%
Vardhman Textiles ($VTL)	15.5%	6.6%	11.9%	17.3%	8.5%
Maral Overseas ($MARALOVER)		4.6%	14.1%	16.0%
Rswm ($RSWM)	17.4%	2.2%	15.2%	15.5%	11.8%
Median (126 companies)	10.1%	3.5%	9.0%	8.9%	10.8%
Arvind ($ARVIND)	9.9%	11.3%	11.2%	13.7%	13.2%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaybharat Textiles & Real Estate ($JAYTEX)	8.4x	10.9x	53.6x	23.8x
Sree Jayalakshmi Autospin ($SREEJAYA)	3.4x		9.7x	12.8x
Bombay Rayon Fashions ($BRFL)	5.9x	4.9x	4.9x	11.6x
Sel Manufacturing Company ($SELMCL)	5.6x	9.4x	6.6x	11.5x
Ruby Mills ($RUBYMILLS)	15.9x	12.6x	15.3x	10.8x
Median (69 companies)	3.9x	3.8x	3.2x	0.0x	1.2x
Arvind ($ARVIND)	3.7x	3.4x	3.3x	3.0x	3.3x

Arvind stock price chart

Arvind financials

mln.	FY2010	FY2011	FY2012

Revenue	93,802	40,846	49,251
EBITDA	4,104	5,300	6,069
Net income	499.5	1,649	4,359
CAPEX	1,651	2,257	4,638
Debt	22,182	19,886	21,283
Cash	439.5	333.8	405.1

About Arvind

Arvind Limited, a textile company, manufactures cotton shirting, denim, knits and bottom weights, fabrics, jeans, and shirt garments in India and internationally. The company operates in Textiles, Brands and Retail, and Other segments. It also produces high performance industrial fabrics for sectors, such as general industrial manufacturing and processing, infrastructure, transport, energy, and personal protection. The company sells its products under the Mainstream, Excalibur Gant, and Flying Machine brand names; and licenses and retails other branded products. In addition, it operates apparel value retail stores under MEGAMART brand name; and specialty retail stores under the licensing arrangement with international brands of Debanhams & Next. Further, the company offers GPS based fleet automation and management; walky talky services; highway traffic management solutions with CSSI; and a range of analog and digital EPABX based enterprise communication solutions for SMEs and corporates. Additionally, it provides heat exchangers, pressure vessels, reactors, DE aerators, columns and towers, economizers, oxygen/nitrogen/chlorine storage, centrifuges, dished ends, and expansion bellows for refineries, gas plant suppliers, petrochemicals, chemicals, dyes intermediaries, drugs and pharmaceuticals, power plants, and aluminum and copper industries. It is also engaged in real estate development activities, including residential, shopping, and commercial complexes; and provision of engineering procurement and construction services for water, wastewater treatment, and recycling projects. Arvind Limited was founded in 1931 and is based in Ahmedabad, India.