Aditya Birla Chemicals (India) demonstrates fast growth

14-05-2014 • About Aditya Birla Chemicals (India) ($ABCIL) • By InTwits

Have you thought about Aditya Birla Chemicals (India) as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Aditya Birla Chemicals (India) showed growth in the last financial year. Aditya Birla Chemicals (India)'s revenue surged on 41.2% in FY2014. At the same time the company well managed its profitability and also showed EBITDA growth of 22.7% for the same period.

In the longer period the company showed fast revenue growth of 65.3% from FY2011 to FY2014 annually. EBITDA surged on 46.9% from FY2011 to FY2014 annually.

Aditya Birla Chemicals (India) ($ABCIL) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	13,309	2,362	6,091	7,552	10,662
Revenue growth, %		-82.2%	157.8%	24.0%	41.2%
SG&A, %
EBITDA	761	793	1,631	2,049	2,514
EBITDA growth, %		4.2%	105.7%	25.7%	22.7%
EBITDA margin, %	5.71%	33.6%	26.8%	27.1%	23.6%
Net Income	535	623	43	196	497
Net Income margin, %	4.02%	26.4%	0.705%	2.60%	4.67%
CAPEX	68	140	8,337	1,827	3,286
CAPEX/Revenue, %	0.513%	5.91%	137%	24.2%	30.8%
Debt	441	262	7,891	8,158	10,042
Cash	452	100	12	177	31
Net Debt/EBITDA	-0.0x	0.2x	4.8x	3.9x	4.0x
ROIC, %	16.2%	15.0%	13.5%	11.7%	12.5%
ROE, %	20.2%	19.4%	1.2%	5.3%	12.4%

Profitability and return on investment

Despite revenue growth EBITDA margin declined slightly from 27.1% in FY2013 to 23.6% in FY2014. In the longer period the company showed big decline in EBITDA margin of 10 pp from 33.6% in FY2011 to 23.6% in FY2014.

Aditya Birla Chemicals (India) shows attractive ROIC at 12.5% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 15.0% in FY2011. For the last three years the average ROIC was 12.6%.

The company's Net Income margin surged on 2.10 pp from 2.60% to 4.70% in FY2014. In the last 3 years the company showed big decline in Net Income margin of 21.7 pp from 26.4% in FY2011 to 4.70% in FY2014.

Aditya Birla Chemicals (India) operates at ROE of 12.4%. It's average level of ROE for the last three years was 6.32%.

Capital expenditures (CAPEX)

To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 30.8% in FY2014. CAPEX/Revenue surged on 24.9 pp from 5.91% in FY2011 to 30.8% in FY2014. It's average level of CAPEX/Revenue for the last three years was 64.0%.

Leverage (Debt)

Aditya Birla Chemicals (India) has medium debt level at 4.0x Net Debt/EBITDA to maintain high growth. In the last 3 years the company showed fast leverage growth of 3.78x from 0.20x in FY2011 to 3.98x in FY2014.

Valuation vs. comparable companies

At the end of trading day today Aditya Birla Chemicals (India) traded at 5.4x EV/EBITDA which is 66.1% lower than 16.0x Commodity Chemicals peer group avearge calculated on the basis of 186 companies. The company trades at 7.2x P/E which is 90% lower than 72.6x Commodity Chemicals industry avearge calculated based on 22 companies.

Peers in Commodity Chemicals

Below you can find Aditya Birla Chemicals (India) benchmarking vs. other companies in Commodity Chemicals 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, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top
Balaji Amines ($BALAMINES)		-53.0%	29.6%	13.9%	19.2%
Chemfab Alkalis ($CHEMFALKAL)		-32.7%	-1.6%	46.3%	-2.8%
Median (2 companies)		-42.9%	14.0%	30.1%	8.2%
Aditya Birla Chemicals (India) ($ABCIL)		-82.2%	157.8%	24.0%	41.2%

Top companies by EBITDA margin, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top
Chemfab Alkalis ($CHEMFALKAL)	14.6%	19.0%	22.3%	32.9%	24.2%
Balaji Amines ($BALAMINES)	6.4%	18.3%	17.6%	15.5%	14.3%
Median (2 companies)	8.6%	18.6%	20.0%	24.2%	19.3%
Aditya Birla Chemicals (India) ($ABCIL)	5.7%	33.6%	26.8%	27.1%	23.6%

Top companies by CAPEX/Revenue, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top
Chemfab Alkalis ($CHEMFALKAL)	8.2%	5.1%	2.2%	15.8%	55.6%
Balaji Amines ($BALAMINES)	2.3%	16.5%	13.2%	17.6%	8.7%
Median (2 companies)	2.8%	10.8%	7.7%	16.7%	32.1%
Aditya Birla Chemicals (India) ($ABCIL)	0.5%	5.9%	136.9%	24.2%	30.8%

Top companies by ROIC, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Chemfab Alkalis ($CHEMFALKAL)	10.3%	8.3%	10.9%	29.9%	15.9%
Balaji Amines ($BALAMINES)	19.5%	20.3%	19.3%	16.1%	15.6%
Diamines & Chemicals ($DIAMINESQ)				9.3%
Haryana Leather Chemicals ($HARLETH)	19.6%	15.7%	9.4%	12.0%
Venlon Enterprises ($VENLONENT)			-1.8%	-3.3%
Median (6 companies)	19.5%	15.7%	10.2%	12.0%	15.7%
Aditya Birla Chemicals (India) ($ABCIL)	16.2%	15.0%	13.5%	11.7%	12.5%

Top companies by Net Debt / EBITDA

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Balaji Amines ($BALAMINES)	2.1x	2.6x	2.5x	2.6x	2.6x
Chemfab Alkalis ($CHEMFALKAL)	-0.1x	-0.0x	-0.2x	-0.1x	0.8x
Diamines & Chemicals ($DIAMINESQ)			2.1x	2.0x	0.0x
Haryana Leather Chemicals ($HARLETH)	0.1x	0.5x	-0.1x	0.1x	0.0x
Venlon Enterprises ($VENLONENT)			338.2x		0.0x
Median (5 companies)	0.1x	0.5x	2.1x	1.1x	0.0x
Aditya Birla Chemicals (India) ($ABCIL)	-0.0x	0.2x	4.8x	3.9x	4.0x

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