Looking for growth stocks? Pay attention to Fiem Industries

04-06-2014 • About Fiem Industries ($FIEMIND) • By InTwits

Pay attention to Fiem Industries as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

Fiem Industries showed fast growth in the last financial year. The company's revenue surged on 18.7% in FY2014. The growth also happened in EBITDA of 20.2% for the same period.

If we look for the longer period Fiem Industries showed fast revenue growth of 19.0% from FY2011 to FY2014 annually. EBITDA surged on 29.3% from FY2011 to FY2014 annually.

Fiem Industries ($FIEMIND) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	9,308	4,248	5,320	6,031	7,162
Revenue growth, %		-54.4%	25.2%	13.4%	18.7%
SG&A, %
EBITDA	309	410	727	737	886
EBITDA growth, %		32.9%	77.4%	1.3%	20.2%
EBITDA margin, %	3.32%	9.65%	13.7%	12.2%	12.4%
Net Income	106	111	211	277	373
Net Income margin, %	1.14%	2.60%	3.97%	4.60%	5.20%

CAPEX	255	902	666	282	477
CAPEX/Revenue, %	2.74%	21.2%	12.5%	4.68%	6.66%
Debt	542	1,307	1,627	1,342	1,191
Cash	15	44	17	16	18
Net Debt/EBITDA	1.7x	3.1x	2.2x	1.8x	1.3x

ROIC, %		12.4%	18.7%	16.9%	19.9%
ROE, %		9.4%	15.7%	17.8%	20.4%

Profitability and return on investment

EBITDA growth was supported by margin expansion. The company showed small growth in EBITDA margin of 0.200 pp from 12.2% to 12.4% in FY2014. In the longer period EBITDA margin surged on 2.70 pp from 9.70% in FY2011 to 12.4% in FY2014.

Fiem Industries shows attractive ROIC at 19.9% for the last 12 months which assumes stable development model. Three years ago it was lower at 12.4%. Average ROIC for the last three years was 18.5%.

Fiem Industries showed fast Net Income margin growth of 0.600 pp from 4.60% to 5.20% in FY2014. In the longer period Net Income margin surged on 2.60 pp from 2.60% in FY2011 to 5.20% in FY2014.

Fiem Industries operates at ROE of 20.4%. Average ROE for the last three years was 18.0%.

Capital expenditures (CAPEX)

To this fast growth Fiem Industries had to invest in CAPEX.The company's CAPEX/Revenue was 6.66% in FY2014. Fiem Industries showed big decline in CAPEX/Revenue of 14.6 pp from 21.2% in FY2011 to 6.66% in FY2014. It's average CAPEX/Revenue for the last three years was 7.95%.

Leverage (Debt)

Having such a fast growth profile Fiem Industries keeps medium debt level at 1.3x Net Debt/EBITDA. In the last 3 years leverage dropped on 1.76x from 3.08x in FY2011 to 1.32x in FY2014.

Valuation vs. comparable companies

The company trades at 7.0x EV/EBITDA which is 56.1% lower than 16.0x Auto Parts & Equipment industry avearge calculated based on 122 companies. The company trades at 13.5x P/E which is 26.7% lower than 18.5x Auto Parts & Equipment industry avearge calculated based on 16 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 15.2x EV/(EBITDA-CAPEX) which is not surprisingly 67.6% higher than 9.1x Auto Parts & Equipment industry avearge calculated based on 14 companies.

Peers in Auto Parts & Equipment

Below we provide Fiem Industries benchmarking against other companies in Auto Parts & Equipment 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, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Exide Industries ($EXIDEIND)		-59.6%	11.5%	19.7%	30.6%
Motherson Sumi Systems ($MOTHERSUMI)		-86.4%	79.1%	71.3%	20.2%
Amara Raja Batteries ($AMARAJABAT)		-66.9%	34.3%	25.1%	16.1%
L.G.Balakrishnan & Bros ($LGBBROSLTD)		-48.0%	27.7%	4.8%	15.9%
Munjal Auto Industries ($MUNJALAU)		-50.8%	30.8%	5.5%	13.8%

Median (21 companies)		-35.3%	16.9%	1.3%	4.9%
Fiem Industries ($FIEMIND)		-54.4%	25.2%	13.4%	18.7%

Top companies by EBITDA margin, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Tube Investments Of India ($TUBEINVEST)	7.2%	33.7%	18.4%	24.4%	28.3%
Shanthi Gears ($SHANTIGEAR)	27.8%	44.6%	37.9%	30.2%	27.8%
Amtek Auto ($AMTEKAUTO)			25.1%		20.7%
Banco Products (India) ($BANCOINDIA)	7.8%	12.9%	12.2%	11.6%	14.4%
Amara Raja Batteries ($AMARAJABAT)	5.5%	15.0%	14.9%	15.7%	14.2%

Median (22 companies)	5.8%	10.9%	11.1%	9.6%	9.6%
Fiem Industries ($FIEMIND)	3.3%	9.7%	13.7%	12.2%	12.4%

Top companies by CAPEX/Revenue, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Amtek Auto ($AMTEKAUTO)			18.9%		27.1%
Amara Raja Batteries ($AMARAJABAT)	1.3%	2.9%	3.7%	2.5%	10.9%
Subros ($SUBROS)	5.4%	11.6%	16.6%	10.7%	9.3%
Munjal Auto Industries ($MUNJALAU)	3.7%	8.4%	2.5%	2.0%	6.7%
Tube Investments Of India ($TUBEINVEST)	2.1%	4.7%	6.0%	8.0%	6.2%

Median (18 companies)	2.2%	7.3%	4.0%	4.3%	4.2%
Fiem Industries ($FIEMIND)	2.7%	21.2%	12.5%	4.7%	6.7%

Top companies by ROIC, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Amara Raja Batteries ($AMARAJABAT)	39.1%	30.5%	32.1%	34.5%	30.3%
Exide Industries ($EXIDEIND)	45.9%	34.2%	24.2%	24.3%	29.5%
Motherson Sumi Systems ($MOTHERSUMI)	15.9%	23.7%	13.5%	16.5%	25.0%
Munjal Showa ($MUNJALSHOW)	14.6%	18.8%	29.9%	23.8%	22.5%
Munjal Auto Industries ($MUNJALAU)	23.6%	26.3%	30.6%	21.5%	21.1%

Median (29 companies)	14.5%	17.8%	17.5%	13.9%	12.4%
Fiem Industries ($FIEMIND)		12.4%	18.7%	16.9%	19.9%

Top companies by Net Debt / EBITDA

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Tube Investments Of India ($TUBEINVEST)	5.8x	8.1x	17.6x	17.8x	17.3x
Autoline Industries ($AUTOIND)	3.3x	3.1x	3.2x	4.0x	12.0x
Automotive Stampings & Assemblies ($ASAL)	1.8x	1.8x	1.1x	3.9x	6.3x
Ucal Fuel Systems ($UCALFUEL)	8.4x	4.1x	4.3x	5.6x	5.7x
Amtek Auto ($AMTEKAUTO)			4.8x		5.3x

Median (29 companies)	1.5x	1.6x	1.1x	1.6x	0.7x
Fiem Industries ($FIEMIND)	1.7x	3.1x	2.2x	1.8x	1.3x

Fiem Industries stock price chart

Fiem Industries financials

mln.	FY2010	FY2011	FY2012

Revenue	9,308	4,248	5,320
EBITDA	308.6	410.1	727.4
Net income	105.7	110.6	211.4
CAPEX	255.1	902.1	666.1
Debt	542.4	1,307	1,627
Cash	14.850	44.184	16.820

About Fiem Industries

Fiem Industries Limited manufactures and supplies automotive lighting and signaling equipment, and rear view mirrors in India and internationally. The company offers head lamps, tail lamps, blinker lamps, signaling lamps, interior lamps, front/fog auxiliary lamps, number plate lamps, work lamps, LED tail lamps, direction indicators, side lamps, other markers, side markers, bulbs, decorative lights, display panels, roof lamps, wheel covers, warning triangles, complete rear fender assembly, frame assembly, mudguards, plastic parts and sheet metal components, etc. It also provides inside and outside rear view mirrors; warning triangles and beacon lamps reflex reflectors; and LED lamps, including automotive lamps, LED lighting tubes, LED replacement bulbs, and outdoor patio LED lights. Its customers include four-wheeler and two-wheeler manufacturing companies. The company also exports LED luminaries, such as LED bulbs, LED tube lights, LED ceiling lights, LED down lights, LED solar lanterns, LED torches and LED street lights, LED bay lights, LED bollards, and LED flood lights. Fiem Industries Limited was incorporated in 1989 and is based in Sonepat, India.