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Fiem Industries is a powerful growth stock

06-06-2016 • About Fiem Industries ($FIEMIND) • By InTwits

Fiem Industries is an attractive growth stock in Auto Parts & Equipment industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story


Fiem Industries showed fast growth in the last financial year. Fiem Industries's revenue surged on 19.4% in FY2016. EBITDA also increased considerably: 23.6% for the same period.

In the last 3 years the company showed fast revenue growth of 17.5% from FY2013 to FY2016 annually. EBITDA surged on 20.0% from FY2013 to FY2016 annually.

Fiem Industries ($FIEMIND) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue5,3206,0317,1628,2019,790
Revenue growth, %13.4%18.7%14.5%19.4%
SG&A, %
EBITDA7277378861,0301,273
EBITDA growth, %1.3%20.2%16.3%23.6%
EBITDA margin, %13.7%12.2%12.4%12.6%13.0%
Net Income211277373425573
Net Income margin, % 3.97%4.60%5.20%5.18%5.86%
 
CAPEX6662824775901,094
CAPEX/Revenue, %12.5%4.68%6.66%7.19%11.2%
Debt1,6271,3421,1911,1711,400
Cash1716181644
Net Debt/EBITDA2.2x1.8x1.3x1.1x1.1x
 
ROIC, %18.7%16.9%19.9%20.2%23.1%
ROE, %15.7%17.8%20.4%20.0%22.9%

Profitability and return on investment


Margin expansion supported EBITDA growth. EBITDA margin increased slightly on 0.400 pp from 12.6% to 13% in FY2016. In the longer period Fiem Industries's EBITDA margin increased on 0.800 pp from 12.2% in FY2013 to 13% in FY2016.

Fiem Industries shows attractive ROIC at 23.1% for the last 12 months which assumes stable development model. Three years ago it was lower at 16.9%. Average ROIC for the last three years was 21.1%.

The company's Net Income margin surged on 0.700 pp from 5.20% to 5.90% in FY2016. In the last 3 years Net Income margin surged on 1.30 pp from 4.60% in FY2013 to 5.90% in FY2016.

Fiem Industries operates at ROE of 22.9%. It's average level of ROE for the last three years was 21.1%.

Capital expenditures (CAPEX)


To this fast growth the company had to invest in CAPEX.In FY2016 the company had CAPEX/Revenue of 11.2%. The company showed fast CAPEX/Revenue growth of 6.49 pp from 4.68% in FY2013 to 11.2% in FY2016. It's average level of CAPEX/Revenue for the last three years was 8.34%.

Leverage (Debt)


The company has medium debt level at 1.1x Net Debt/EBITDA to maintain high growth. If we look for the longer period the company's leverage dropped on 0.73x from 1.80x in FY2013 to 1.06x in FY2016.

Valuation vs. comparable companies


The company trades at 8.3x EV/EBITDA which is 66.1% lower than 24.5x Auto Parts & Equipment industry avearge calculated based on 122 companies. The market closed today at 16.1x P/E for Fiem Industries which is 27.9% lower than 22.4x Auto Parts & Equipment peer group avearge calculated on the basis of 13 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 59.3x EV/(EBITDA-CAPEX) which is not surprisingly 1,770% higher than 3.2x Auto Parts & Equipment industry avearge calculated based on 13 companies.

Peers in Auto Parts & Equipment


Below we provide Fiem Industries benchmarking against other companies in Auto Parts & Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Suprajit Engineering ($SUPRAJIT)9.4%17.9%12.2%55.7%
Ip Rings ($IPRINGLTD)2.4%-0.1%19.5%16.7%
Amara Raja Batteries ($AMARAJABAT)25.1%16.1%22.6%11.4%
Spectra Industries ($SPECTRA)40.2%-10.1%57.1%11.1%
Motherson Sumi Systems ($MOTHERSUMI)71.3%20.2%14.0%10.7%
 
Median (35 companies)12.1%2.4%4.9%8.7%2.8%
Fiem Industries ($FIEMIND)13.4%18.7%14.5%19.4%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Ist ($ISTLTD)71.6%
Tube Investments Of India ($TUBEINVEST)18.4%24.4%28.3%30.0%21.4%
Shivam Autotech ($SHIVAMAUTO)24.1%24.1%20.6%18.7%16.6%
Amara Raja Batteries ($AMARAJABAT)14.9%15.7%14.2%17.0%17.6%
Suprajit Engineering ($SUPRAJIT)16.2%17.0%17.2%16.2%17.4%
 
Median (45 companies)10.8%9.8%10.1%9.9%10.8%
Fiem Industries ($FIEMIND)13.7%12.2%12.4%12.6%13.0%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Shivam Autotech ($SHIVAMAUTO)11.6%4.1%4.9%12.5%27.9%
Amara Raja Batteries ($AMARAJABAT)3.7%2.5%10.9%9.6%11.0%
Steel Strips Wheels ($SSWL)13.3%11.4%5.8%4.5%9.7%
Jbm Auto ($JBMA)9.8%8.4%14.4%7.8%
Rico Auto Industries ($RICOAUTO)5.8%10.9%5.7%14.2%7.4%
 
Median (22 companies)5.7%4.5%4.6%4.5%4.9%
Fiem Industries ($FIEMIND)12.5%4.7%6.7%7.2%11.2%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Amara Raja Batteries ($AMARAJABAT)32.1%34.5%30.3%35.4%33.7%
Suprajit Engineering ($SUPRAJIT)31.8%28.0%26.1%22.9%25.1%
Motherson Sumi Systems ($MOTHERSUMI)13.5%16.5%25.0%24.9%25.1%
Gabriel India ($GABRIEL)19.9%15.5%18.0%24.0%25.0%
Harita Seating Systems ($HARITASEAT)16.6%16.2%12.7%12.5%22.4%
 
Median (48 companies)15.7%11.9%14.5%14.5%13.6%
Fiem Industries ($FIEMIND)18.7%16.9%19.9%20.2%23.1%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Shivam Autotech ($SHIVAMAUTO)2.0x1.5x1.5x2.2x4.3x
Steel Strips Wheels ($SSWL)5.4x6.3x6.5x5.6x4.2x
Jbm Auto ($JBMA)3.0x2.8x1.7x2.5x2.7x
Rico Auto Industries ($RICOAUTO)3.6x4.2x2.3x1.5x2.1x
Subros ($SUBROS)3.1x2.8x3.1x3.1x1.9x
 
Median (39 companies)1.2x2.3x0.7x0.0x0.0x
Fiem Industries ($FIEMIND)2.2x1.8x1.3x1.1x1.1x