Eye on Adi Finechem with its long history of healthy growth
26-05-2014 • About Adi Finechem (
$ADIFINCHM) • By InTwits
Adi Finechem is an attractive growth stock in Specialty Chemicals industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Adi Finechem showed fast growth in the last financial year. The company's revenue surged on 23.3% in FY2014. EBITDA also increased considerably: 93.8% for the same period.
In the last 3 years Adi Finechem showed fast revenue growth of 38.3% from FY2011 to FY2014 annually. EBITDA surged on 47.4% from FY2011 to FY2014 annually.
Adi Finechem ($ADIFINCHM) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 1,695 | 574 | 972 | 1,231 | 1,518 |
|---|
| Revenue growth, % | | -66.2% | 69.4% | 26.7% | 23.3% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 26 | 105 | 147 | 173 | 335 |
|---|
| EBITDA growth, % | | 304.0% | 40.2% | 17.8% | 93.8% |
|---|
| EBITDA margin, % | 1.53% | 18.2% | 15.1% | 14.0% | 22.1% |
|---|
| Net Income | -6 | 51 | 74 | 84 | 187 |
|---|
| Net Income margin, % | -0.328% | 8.83% | 7.59% | 6.81% | 12.3% |
|---|
| |
| CAPEX | 4 | 47 | 71 | 60 | 191 |
|---|
| CAPEX/Revenue, % | 0.230% | 8.23% | 7.31% | 4.84% | 12.6% |
|---|
| Debt | 130 | 143 | 211 | 180 | 291 |
|---|
| Cash | 1 | 2 | 1 | 1 | 1 |
|---|
| Net Debt/EBITDA | 5.0x | 1.3x | 1.4x | 1.0x | 0.9x |
|---|
| |
| ROIC, % | 3.0% | 27.6% | 30.6% | 29.8% | 46.4% |
|---|
| ROE, % | -4.0% | 32.7% | 35.8% | 30.7% | 47.8% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. EBITDA margin surged on 8.10 pp from 14% to 22.1% in FY2014. In the last 3 years Adi Finechem showed fast EBITDA margin growth of 3.90 pp from 18.2% in FY2011 to 22.1% in FY2014.
We call Adi Finechem an attractive growth stock as together with the growth it delivers high ROIC at 46.4%. Three years ago it was considerably lower at 27.6%. Average ROIC for the last three years was 35.6%.
The company's Net Income margin surged on 5.50 pp from 6.80% to 12.3% in FY2014. In the last 3 years Net Income margin surged on 3.50 pp from 8.80% in FY2011 to 12.3% in FY2014.
Adi Finechem operates at ROE of 47.8%. It's average ROE for the last three years was 38.1%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 12.6% in FY2014. The company showed fast CAPEX/Revenue growth of 4.34 pp from 8.23% in FY2011 to 12.6% in FY2014. It's average level of CAPEX/Revenue for the last three years was 8.24%.
Leverage (Debt)
Adi Finechem has low debt level at 0.9x Net Debt/EBITDA - at the same time with high growth. In the longer period leverage dropped on 0.48x from 1.35x in FY2011 to 0.87x in FY2014.
Peers in Specialty Chemicals
Below we provide Adi Finechem benchmarking against other companies in Specialty Chemicals 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, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Dai-Ichi Karkaria ($DAICHI) | | -68.8% | 20.7% | 31.4% | 45.4% |
| Vinati Organics ($VINATIORGA) | | -63.9% | 38.7% | 23.6% | 25.9% |
| Nocil ($NOCIL) | | -45.8% | 6.4% | 1.8% | 22.3% |
| Poddar Pigments ($PODARPIGQ) | | -50.8% | 19.0% | 24.1% | 13.7% |
| India Gelatine & Chemicals ($INDGELA) | | | | 17.0% | 3.2% |
| |
|---|
| Median (8 companies) | | -50.8% | 21.2% | 20.3% | 8.5% |
|---|
| Adi Finechem ($ADIFINCHM) | | -66.2% | 69.4% | 26.7% | 23.3% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Vinati Organics ($VINATIORGA) | 6.5% | 21.7% | 21.7% | 21.8% | 22.7% |
| India Gelatine & Chemicals ($INDGELA) | | | 10.9% | 18.9% | 12.6% |
| Nocil ($NOCIL) | 6.6% | 11.8% | 10.7% | 4.3% | 10.6% |
| Dai-Ichi Karkaria ($DAICHI) | 2.3% | 11.6% | 8.5% | 5.8% | 8.5% |
| Poddar Pigments ($PODARPIGQ) | 3.3% | 8.4% | 8.9% | 7.3% | 7.1% |
| |
|---|
| Median (8 companies) | 3.3% | 10.1% | 9.9% | 10.6% | 7.8% |
|---|
| Adi Finechem ($ADIFINCHM) | 1.5% | 18.2% | 15.1% | 14.0% | 22.1% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Nitta Gelatin India ($NITTAGELA) | 5.5% | 21.3% | 8.8% | 4.6% | 8.5% |
| Nocil ($NOCIL) | 0.8% | 6.5% | 19.6% | 19.0% | 4.7% |
| Vinati Organics ($VINATIORGA) | 3.9% | 11.1% | 13.6% | 28.2% | 4.2% |
| Cochin Minerals & Rutile ($COCHINM) | 2.2% | 1.5% | 0.5% | 2.2% | 3.3% |
| Jayant Agro-Organics ($JAYAGROGN) | 3.1% | 1.2% | 3.2% | 2.3% | 0.9% |
| |
|---|
| Median (5 companies) | 2.2% | 6.5% | 6.0% | 7.9% | 4.2% |
|---|
| Adi Finechem ($ADIFINCHM) | 0.2% | 8.2% | 7.3% | 4.8% | 12.6% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Vinati Organics ($VINATIORGA) | 36.1% | 31.4% | 29.6% | 26.2% | 30.6% |
| Jayant Agro-Organics ($JAYAGROGN) | 13.2% | 15.5% | 19.1% | 17.5% | 11.1% |
| Nocil ($NOCIL) | 13.4% | 12.9% | 10.6% | 2.5% | 7.9% |
| Nitta Gelatin India ($NITTAGELA) | 27.0% | 2.1% | 7.2% | 14.8% | 0.7% |
| Alkali Metals ($ALKALI) | 15.6% | 5.7% | -10.5% | 3.0% | -0.5% |
| |
|---|
| Median (13 companies) | 13.4% | 11.1% | 12.1% | 14.2% | 4.3% |
|---|
| Adi Finechem ($ADIFINCHM) | 3.0% | 27.6% | 30.6% | 29.8% | 46.4% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Cochin Minerals & Rutile ($COCHINM) | 1.6x | 0.7x | -0.0x | -0.0x | 32.3x |
| Alkali Metals ($ALKALI) | 0.9x | 4.3x | | 5.1x | 11.6x |
| Jayant Agro-Organics ($JAYAGROGN) | 5.6x | 3.9x | 2.8x | 3.1x | 4.6x |
| Nitta Gelatin India ($NITTAGELA) | -0.0x | 3.9x | 2.7x | 1.3x | 3.8x |
| Nocil ($NOCIL) | 0.4x | 0.0x | 1.3x | 6.5x | 2.2x |
| |
|---|
| Median (10 companies) | 0.9x | 2.3x | 1.3x | 1.7x | 1.5x |
|---|
| Adi Finechem ($ADIFINCHM) | 5.0x | 1.3x | 1.4x | 1.0x | 0.9x |
