Vakrangee is an attractive growth stock
29-05-2014 • About Vakrangee (
$VAKRANGEE) • By InTwits
Pay attention to Vakrangee as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Vakrangee showed fast growth in the last financial year. The company's revenue surged on 26.2% in FY2014. The growth also happened in EBITDA of 40.1% for the same period.
In the longer period Vakrangee showed fast revenue growth of 29.9% from FY2011 to FY2014 annually. EBITDA surged on 56.7% from FY2011 to FY2014 annually.
Vakrangee ($VAKRANGEE) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 31,954 | 8,897 | 13,532 | 15,472 | 19,519 |
|---|
| Revenue growth, % | | -72.2% | 52.1% | 14.3% | 26.2% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 798 | 1,388 | 2,415 | 3,815 | 5,346 |
|---|
| EBITDA growth, % | | 73.9% | 74.0% | 58.0% | 40.1% |
|---|
| EBITDA margin, % | 2.50% | 15.6% | 17.8% | 24.7% | 27.4% |
|---|
| Net Income | 235 | 481 | 709 | 1,043 | 1,750 |
|---|
| Net Income margin, % | 0.737% | 5.41% | 5.24% | 6.74% | 8.97% |
|---|
| |
| CAPEX | 641 | 605 | 3,745 | 930 | 2,284 |
|---|
| CAPEX/Revenue, % | 2.01% | 6.80% | 27.7% | 6.01% | 11.7% |
|---|
| Debt | 686 | 1,634 | 4,590 | 5,419 | 4,923 |
|---|
| Cash | 8 | 90 | 58 | 25 | 26 |
|---|
| Net Debt/EBITDA | 0.8x | 1.1x | 1.9x | 1.4x | 0.9x |
|---|
| |
| ROIC, % | 10.3% | 17.1% | 20.2% | 21.3% | 28.3% |
|---|
| ROE, % | 8.3% | 14.7% | 18.3% | 22.4% | 27.1% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. Vakrangee showed fast EBITDA margin growth of 2.70 pp from 24.7% to 27.4% in FY2014. If we look for the longer period the company's EBITDA margin surged on 11.8 pp from 15.6% in FY2011 to 27.4% in FY2014.
We call Vakrangee an attractive growth stock as together with the growth it delivers high ROIC at 28.3%. During the last three years it surged - it was 17.1% in FY2011. Average ROIC for the last three years was 23.3%.
The company's Net Income margin surged on 2.30 pp from 6.70% to 9% in FY2014. In the last 3 years Vakrangee showed fast Net Income margin growth of 3.60 pp from 5.40% in FY2011 to 9% in FY2014.
Vakrangee operates at ROE of 27.1%. It's average ROE for the last three years was 22.6%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 11.7% in FY2014. CAPEX/Revenue surged on 4.90 pp from 6.80% in FY2011 to 11.7% in FY2014. Average CAPEX/Revenue for the last three years was 15.1%.
Leverage (Debt)
The company has low debt level at 0.9x Net Debt/EBITDA - at the same time with high growth. In the longer period the company's leverage dropped on 0.20x from 1.11x in FY2011 to 0.92x in FY2014.
Valuation vs. comparable companies
The company trades at 12.3x EV/EBITDA which is 23.1% lower than 16.0x BPO/KPO industry avearge calculated based on 18 companies. The company trades at 34.8x P/E which is not surprisingly 96.1% higher than 17.7x BPO/KPO industry avearge calculated based on 3 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 21.5x EV/(EBITDA-CAPEX) which is not surprisingly 1,640% higher than 1.2x BPO/KPO industry avearge calculated based on 3 companies.
Peers in BPO/KPO
Below we provide Vakrangee benchmarking against other companies in BPO/KPO 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 |
|---|
| Eclerx Services ($ECLERX) | | -69.1% | 38.2% | 39.7% | 27.3% |
| Hinduja Global Solutions ($HGS) | | -66.6% | 44.8% | 27.6% | 26.3% |
| Firstsource Solutions ($FSL) | | -42.4% | 12.1% | 25.0% | 10.2% |
| |
|---|
| Median (3 companies) | | -66.6% | 38.2% | 27.6% | 26.3% |
|---|
| Vakrangee ($VAKRANGEE) | | -72.2% | 52.1% | 14.3% | 26.2% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Eclerx Services ($ECLERX) | 9.1% | 55.9% | 40.4% | 38.7% | 42.0% |
| Hinduja Global Solutions ($HGS) | 5.2% | 14.6% | 11.9% | 11.3% | 13.0% |
| Firstsource Solutions ($FSL) | 8.0% | 14.5% | 8.7% | 9.9% | 11.7% |
| |
|---|
| Median (3 companies) | 8.5% | 14.6% | 11.9% | 11.3% | 13.0% |
|---|
| Vakrangee ($VAKRANGEE) | 2.5% | 15.6% | 17.8% | 24.7% | 27.4% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Hinduja Global Solutions ($HGS) | 1.3% | 6.0% | 31.5% | 7.2% | 6.1% |
| Eclerx Services ($ECLERX) | 0.8% | 7.0% | 5.3% | 4.0% | 2.5% |
| Firstsource Solutions ($FSL) | 1.6% | 2.1% | 2.3% | 1.4% | 1.2% |
| |
|---|
| Median (3 companies) | 1.5% | 6.0% | 5.3% | 4.0% | 2.5% |
|---|
| Vakrangee ($VAKRANGEE) | 2.0% | 6.8% | 27.7% | 6.0% | 11.7% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Eclerx Services ($ECLERX) | 51.4% | 83.3% | 61.1% | 58.7% | 62.4% |
| Hinduja Global Solutions ($HGS) | 12.0% | 9.9% | 8.1% | 8.2% | 12.4% |
| Firstsource Solutions ($FSL) | 6.8% | 7.0% | 4.0% | 7.0% | 9.0% |
| Excel Infoways ($EXCELINFO) | 18.7% | 11.9% | 1.7% | 2.6% | |
| |
|---|
| Median (4 companies) | 15.4% | 10.9% | 6.0% | 7.6% | 12.4% |
|---|
| Vakrangee ($VAKRANGEE) | 10.3% | 17.1% | 20.2% | 21.3% | 28.3% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Firstsource Solutions ($FSL) | 4.5x | 4.3x | 4.2x | 4.2x | 2.8x |
| Hinduja Global Solutions ($HGS) | 0.2x | -3.0x | 0.8x | 1.7x | 1.5x |
| Eclerx Services ($ECLERX) | -0.3x | -0.1x | -0.7x | -0.5x | -0.7x |
| |
|---|
| Median (3 companies) | 0.0x | -0.1x | 0.3x | 1.5x | 1.5x |
|---|
| Vakrangee ($VAKRANGEE) | 0.8x | 1.1x | 1.9x | 1.4x | 0.9x |
