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Is Nitin Fire Protection Industries a solid growth stock? - The numbers tells it is

07-06-2016 • About Nitin Fire Protection Industries ($NITINFIRE) • By InTwits

Pay attention to Nitin Fire Protection Industries as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story


Nitin Fire Protection Industries showed fast growth in the last financial year. Nitin Fire Protection Industries's revenue surged on 29.8% in FY2016. At the same time Nitin Fire Protection Industries well managed its profitability and showed even faster growth in EBITDA of 45.2% for the same period.

In the last 3 years Nitin Fire Protection Industries showed fast revenue growth of 28.1% from FY2013 to FY2016 annually. EBITDA surged on 25.4% from FY2013 to FY2016 annually.

Nitin Fire Protection Industries ($NITINFIRE) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue5,3607,04710,16111,40314,797
Revenue growth, %31.5%44.2%12.2%29.8%
SG&A, %
EBITDA7618731,1761,1861,722
EBITDA growth, %14.6%34.7%0.9%45.2%
EBITDA margin, %14.2%12.4%11.6%10.4%11.6%
Net Income440570665671985
Net Income margin, % 8.21%8.09%6.55%5.89%6.66%
 
CAPEX1613452602701,720
CAPEX/Revenue, %3.01%4.89%2.56%2.36%11.6%
Debt2,9283,5303,9245,0205,546
Cash206494367610157
Net Debt/EBITDA3.6x3.5x3.0x3.7x3.1x
 
ROIC, %13.2%14.7%12.1%13.2%
ROE, %17.8%19.5%19.3%16.6%19.2%

Profitability and return on investment


Margin expansion supported EBITDA growth. The company showed fast EBITDA margin growth of 1.20 pp from 10.4% to 11.6% in FY2016. If we look for the longer period EBITDA margin decreased on 0.800 pp from 12.4% in FY2013 to 11.6% in FY2016.

We call Nitin Fire Protection Industries an attractive growth stock as together with the growth it delivers high ROIC at 13.2%. Three years ago it was about the same at 13.2%. For the last three years the average ROIC was 13.3%.

Net Income margin surged on 0.800 pp from 5.90% to 6.70% in FY2016. In the longer period Nitin Fire Protection Industries's Net Income margin dropped on 1.40 pp from 8.10% in FY2013 to 6.70% in FY2016.

Nitin Fire Protection Industries operates at ROE of 19.2%. It's average ROE for the last three years was 18.4%.

Capital expenditures (CAPEX)


To fuel this fast growth Nitin Fire Protection Industries had to invest in CAPEX.Nitin Fire Protection Industries's CAPEX/Revenue was 11.6% in FY2016. The company showed fast CAPEX/Revenue growth of 6.73 pp from 4.89% in FY2013 to 11.6% in FY2016. Average CAPEX/Revenue for the last three years was 5.52%.

Leverage (Debt)


Having such a fast growth profile Nitin Fire Protection Industries keeps medium debt level at 3.1x Net Debt/EBITDA. In the last 3 years the company's leverage dropped on 0.35x from 3.48x in FY2013 to 3.13x in FY2016.

Valuation vs. comparable companies


At the end of trading day today Nitin Fire Protection Industries traded at 8.4x EV/EBITDA which is 65.8% lower than 24.5x Industrial Machinery peer group avearge calculated on the basis of 127 companies. The market closed today at 9.2x P/E for Nitin Fire Protection Industries which is 86% lower than 65.5x Industrial Machinery peer group avearge calculated on the basis of 16 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 6,453.4x EV/(EBITDA-CAPEX) which is not surprisingly 2,940% higher than 212.2x Industrial Machinery industry avearge calculated based on 11 companies.

Peers in Industrial Machinery


Below we provide Nitin Fire Protection Industries benchmarking against other companies in Industrial Machinery 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
Batliboi ($BATLIBOI)-54.5%74.2%
Wpil ($WPIL)38.4%0.3%-5.5%51.3%
Revathi Equipment ($REVATHI)10.3%-19.9%-7.2%50.3%
Lloyd Electric & Engineering ($LLOYDELENG)9.9%20.5%22.3%27.3%
Manugraph India ($MANUGRAPH)-17.4%-19.8%-14.6%22.6%
 
Median (27 companies)2.7%2.3%1.6%2.8%6.7%
Nitin Fire Protection Industries ($NITINFIRE)31.5%44.2%12.2%29.8%


Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top
Bell Agromachina ($BELAGRO)0.0%0.0%0.0%0.0%0.0%
 
Median (1 company)0.0%0.0%0.0%0.0%0.0%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Texmaco Infrastructure & Holdings ($TEXINFRA)40.5%
Dhp India ($DHPIND)26.3%
Shilp Gravures ($SHILGRAVQ)19.4%
Solitaire Machine Tools ($SOLIMAC)19.4%
Wendt (India) ($WENDT)28.3%21.6%18.6%19.0%16.5%
 
Median (46 companies)11.2%9.6%10.5%10.7%9.8%
Nitin Fire Protection Industries ($NITINFIRE)14.2%12.4%11.6%10.4%11.6%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Texmaco Infrastructure & Holdings ($TEXINFRA)14.0%
Shakti Pumps (India) ($SHAKTIPUMP)5.8%19.0%6.1%9.9%7.5%
Wendt (India) ($WENDT)13.5%9.0%8.8%9.4%9.3%
Ingersoll-Rand (India) ($INGERRAND)4.3%10.9%3.6%9.2%6.7%
Kabra Extrusiontechnik ($KABRAEXTRU)6.5%1.8%0.5%8.8%16.2%
 
Median (23 companies)5.8%4.1%3.0%3.3%3.2%
Nitin Fire Protection Industries ($NITINFIRE)3.0%4.9%2.6%2.4%11.6%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Greaves Cotton ($GREAVESCOT)24.8%16.3%26.7%25.7%
Honda Siel Power Products ($HONDAPOWER)16.9%8.8%11.5%15.3%18.3%
Lakshmi Machine Works ($LAXMIMACH)18.0%11.7%16.2%17.6%18.2%
Kabra Extrusiontechnik ($KABRAEXTRU)11.9%13.9%17.0%
Ion Exchange (India) ($IONEXCHANG)11.0%15.1%8.8%13.1%16.4%
 
Median (50 companies)12.8%11.0%9.7%13.0%10.8%
Nitin Fire Protection Industries ($NITINFIRE)13.2%14.7%12.1%13.2%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Wpil ($WPIL)2.4x2.3x2.2x0.8x5.4x
Kirloskar Brothers ($KIRLOSBROS)2.4x1.3x1.1x1.5x4.7x
Forbes & Company ($FORBESCO)2.2x3.3x4.7x6.3x4.3x
Elecon Engineering Co ($ELECON)3.0x3.2x4.0x3.1x3.9x
Dynamatic Technologies ($DYNAMATECH)5.0x4.1x3.4x2.7x3.8x
 
Median (38 companies)1.3x1.4x0.0x0.0x0.0x
Nitin Fire Protection Industries ($NITINFIRE)3.6x3.5x3.0x3.7x3.1x