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Looking for a growth stock? Pay attention to Balaji Amines

14-05-2014 • About Balaji Amines ($BALAMINES) • By InTwits

Balaji Amines is an attractive growth stock in Commodity Chemicals industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Balaji Amines showed fast growth in the last financial year. The company's revenue surged on 19.2% in FY2014. At the same time the company well managed its profitability and also showed EBITDA growth of 10.1% for the same period.

In the last 3 years the company showed fast revenue growth of 20.7% from FY2011 to FY2014 annually. EBITDA surged on 11.3% from FY2011 to FY2014 annually.

Balaji Amines ($BALAMINES) financials for the last 5 years

mln. INR FY2010 FY2011 FY2012 FY2013 FY2014
Revenue7,3833,4684,4955,1186,101
Revenue growth, %-53.0%29.6%13.9%19.2%
SG&A, %
EBITDA474633793793874
EBITDA growth, %33.6%25.3%0.1%10.1%
EBITDA margin, %6.42%18.3%17.6%15.5%14.3%
Net Income204266356312335
Net Income margin, % 2.77%7.67%7.93%6.09%5.49%
 
CAPEX168573595899530
CAPEX/Revenue, %2.27%16.5%13.2%17.6%8.69%
Debt9971,6551,9722,0932,254
Cash112110
Net Debt/EBITDA2.1x2.6x2.5x2.6x2.6x
 
ROIC, %19.5%20.3%19.3%16.1%15.6%
ROE, %25.9%26.5%27.7%19.7%18.0%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. In the last 3 years the company showed big decline in EBITDA margin of 4 pp from 18.3% in FY2011 to 14.3% in FY2014.

We call Balaji Amines an attractive growth stock as together with the growth it delivers high ROIC at 15.6%. Three years ago it was a bit higher at 20.3%. For the last three years the average ROIC was 17.0%.

Balaji Amines showed decline of 0.600 pp from 6.10% to 5.50% in FY2014. In the longer period the company showed big decline in Net Income margin of 2.20 pp from 7.70% in FY2011 to 5.50% in FY2014.

Balaji Amines operates at ROE of 18.0%. It's average ROE for the last three years was 21.8%.

Capital expenditures (CAPEX)


To fuel this fast growth Balaji Amines had to invest in CAPEX.Balaji Amines's CAPEX/Revenue was 8.69% in FY2014. Balaji Amines showed big decline in CAPEX/Revenue of 7.83 pp from 16.5% in FY2011 to 8.69% in FY2014. For the last three years the average CAPEX/Revenue was 13.2%.

Leverage (Debt)


Having such a fast growth profile Balaji Amines keeps medium debt level at 2.6x Net Debt/EBITDA. If we look for the longer period leverage decreased slightly on 0.04x from 2.61x in FY2011 to 2.57x in FY2014.

Valuation vs. comparable companies


At the end of trading day today Balaji Amines traded at 4.2x EV/EBITDA which is 73.9% lower than 16.0x Commodity Chemicals peer group avearge calculated on the basis of 186 companies. At the end of trading day today Balaji Amines traded at 4.2x P/E which is 94.2% lower than 72.6x Commodity Chemicals peer group avearge calculated on the basis of 22 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Balaji Amines traded at 10.6x EV/(EBITDA-CAPEX) which is 72.1% higher than 6.2x Commodity Chemicals peer group avearge calculated on the basis of 13 companies.

Peers in Commodity Chemicals


Below you can find Balaji Amines 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
Aditya Birla Chemicals (India) ($ABCIL)-82.2%157.8%24.0%41.2%
Chemfab Alkalis ($CHEMFALKAL)-32.7%-1.6%46.3%-2.8%
 
Median (2 companies)-57.5%78.1%35.2%19.2%
Balaji Amines ($BALAMINES)-53.0%29.6%13.9%19.2%


Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Chemfab Alkalis ($CHEMFALKAL)14.6%19.0%22.3%32.9%24.2%
Aditya Birla Chemicals (India) ($ABCIL)5.7%33.6%26.8%27.1%23.6%
 
Median (2 companies)8.6%26.3%24.6%30.0%23.9%
Balaji Amines ($BALAMINES)6.4%18.3%17.6%15.5%14.3%


Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Chemfab Alkalis ($CHEMFALKAL)8.2%5.1%2.2%15.8%55.6%
Aditya Birla Chemicals (India) ($ABCIL)0.5%5.9%136.9%24.2%30.8%
 
Median (2 companies)2.8%5.5%69.5%20.0%43.2%
Balaji Amines ($BALAMINES)2.3%16.5%13.2%17.6%8.7%


Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Chemfab Alkalis ($CHEMFALKAL)10.3%8.3%10.9%29.9%15.9%
Aditya Birla Chemicals (India) ($ABCIL)16.2%15.0%13.5%11.7%12.5%
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)16.2%15.0%10.2%11.7%14.2%
Balaji Amines ($BALAMINES)19.5%20.3%19.3%16.1%15.6%


Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Aditya Birla Chemicals (India) ($ABCIL)-0.0x0.2x4.8x3.9x4.0x
Chemfab Alkalis ($CHEMFALKAL)-0.1x-0.0x-0.2x-0.1x0.8x
Diamines & Chemicals ($DIAMINESQ)2.1x2.0x0.0x
Haryana Leather Chemicals ($HARLETH)0.1x0.5x-0.1x0.1x0.0x
Venlon Enterprises ($VENLONENT)338.2x0.0x
 
Median (5 companies)-0.0x0.2x2.1x1.1x0.0x
Balaji Amines ($BALAMINES)2.1x2.6x2.5x2.6x2.6x


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