Bharat Rasayan is a powerful growth stock
09-06-2014 • About Bharat Rasayan (
$BHARATRA) • By InTwits
Bharat Rasayan is an attractive growth stock in industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Bharat Rasayan showed growth in the last financial year. Bharat Rasayan's revenue surged on 92.7% in FY2014. The growth also happened in EBITDA of 136% for the same period.
If we look for the longer period the company showed fast revenue growth of 56.8% from FY2011 to FY2014 annually. EBITDA surged on 111% from FY2011 to FY2014 annually.
Bharat Rasayan ($BHARATRA) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 5,296 | 938 | 1,419 | 1,876 | 3,614 |
|---|
| Revenue growth, % | | -82.3% | 51.3% | 32.1% | 92.7% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 89 | 70 | 181 | 279 | 659 |
|---|
| EBITDA growth, % | | -21.4% | 158.5% | 54.0% | 136.2% |
|---|
| EBITDA margin, % | 1.68% | 7.47% | 12.8% | 14.9% | 18.2% |
|---|
| Net Income | 49 | 59 | 98 | 96 | 201 |
|---|
| Net Income margin, % | 0.928% | 6.28% | 6.93% | 5.11% | 5.57% |
|---|
| |
| CAPEX | 11 | 28 | 467 | 778 | 257 |
|---|
| CAPEX/Revenue, % | 0.212% | 3.03% | 32.9% | 41.5% | 7.11% |
|---|
| Debt | 38 | 85 | 391 | 1,433 | 1,432 |
|---|
| Cash | 20 | 4 | 9 | 30 | 8 |
|---|
| Net Debt/EBITDA | 0.2x | 1.2x | 2.1x | 5.0x | 2.2x |
|---|
| |
| ROIC, % | 16.1% | 10.0% | 22.1% | 13.7% | 21.9% |
|---|
| ROE, % | 12.1% | 13.6% | 20.3% | 16.6% | 27.8% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. EBITDA margin surged on 3.30 pp from 14.9% to 18.2% in FY2014. If we look for the longer period EBITDA margin surged on 10.7 pp from 7.50% in FY2011 to 18.2% in FY2014.
We call Bharat Rasayan an attractive growth stock as together with the growth it delivers high ROIC at 21.9%. Three years ago it was considerably lower at 10.0%. Average ROIC for the last three years was 19.2%.
Net Income margin increased on 0.500 pp from 5.10% to 5.60% in FY2014. In the longer period the company's Net Income margin dropped on 0.700 pp from 6.30% in FY2011 to 5.60% in FY2014.
Bharat Rasayan operates at ROE of 27.8%. Average ROE for the last three years was 21.6%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2014 Bharat Rasayan had CAPEX/Revenue of 7.11%. The company's CAPEX/Revenue surged on 4.08 pp from 3.03% in FY2011 to 7.11% in FY2014. Average CAPEX/Revenue for the last three years was 27.2%.
Leverage (Debt)
Having such a fast growth profile the company keeps medium debt level at 2.2x Net Debt/EBITDA. In the longer period Bharat Rasayan's leverage surged on 1.01x from 1.15x in FY2011 to 2.16x in FY2014.
Valuation vs. comparable companies
The market closed today at 4.3x EV/EBITDA for Bharat Rasayan which is 73% lower than 16.0x peer group avearge calculated on the basis of 1905 companies. The company trades at 7.0x P/E which is 46.9% lower than 13.3x industry avearge calculated based on 15 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Bharat Rasayan traded at 7.1x EV/(EBITDA-CAPEX) which is 95.4% higher than 3.6x peer group avearge calculated on the basis of 9 companies.
Peers in
Below you can find Bharat Rasayan benchmarking vs. other companies in 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 5 |
|---|
| Indbulbbph ($INDBULBBPH) | | -54.2% | -3.2% | -6.5% | 33.5% |
| Uplbbph ($UPLBBPH) | | -62.4% | 33.2% | 19.7% | 17.3% |
| Ginni Filaments ($GINNIFIL) | | -31.6% | 2.8% | 4.6% | 16.6% |
| Rilbbph ($RILBBPH) | | 30.5% | 34.9% | 10.8% | 9.4% |
| Tvs Electronics ($TVSEL) | | -43.6% | 19.4% | 8.5% | 5.2% |
| |
|---|
| Median (14 companies) | | -34.1% | 17.1% | 6.7% | 2.7% |
|---|
| Bharat Rasayan ($BHARATRA) | | -82.3% | 51.3% | 32.1% | 92.7% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Jenson & Nicholson Financial Services ($JNFSL) | | | 0.0% | 0.0% | 0.0% |
| Bombay Drugs & Pharmas ($BOMDRDM) | | | 0.0% | 0.0% | 0.0% |
| Southern Herbals ($SOUTHNHE) | | | 0.0% | 0.0% | 0.0% |
| Tafnccpeq ($TAFNCCPEQ) | | | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (4 companies) | | | 0.0% | 0.0% | 0.0% |
|---|
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Madras Fertilizers ($MADRASFERT) | 34.1% | 48.3% | 64.5% | 31.7% | 61.2% |
| Indbulbbph ($INDBULBBPH) | -2.8% | 27.9% | 36.7% | 34.6% | 29.5% |
| Indian Metals & Ferro Alloys ($INDMETA-B) | 9.0% | 33.0% | 20.4% | 21.4% | 23.2% |
| Uplbbph ($UPLBBPH) | 6.0% | 18.8% | 18.2% | 18.3% | 18.8% |
| Jklakbbph ($JKLAKBBPH) | 15.5% | 18.8% | 22.8% | 23.6% | 14.7% |
| |
|---|
| Median (12 companies) | 8.5% | 13.4% | 10.4% | 9.0% | 13.2% |
|---|
| Bharat Rasayan ($BHARATRA) | 1.7% | 7.5% | 12.8% | 14.9% | 18.2% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Jklakbbph ($JKLAKBBPH) | 8.3% | 23.6% | 28.5% | 28.8% | 24.6% |
| Rilbbph ($RILBBPH) | 11.4% | 12.7% | 4.6% | 7.7% | 13.8% |
| Indian Metals & Ferro Alloys ($INDMETA-B) | 9.6% | 27.1% | 33.6% | 18.7% | 10.1% |
| Rane Engine Valve ($RANENGIN) | 3.7% | 8.4% | 11.4% | 11.0% | 4.1% |
| Asleyf ($ASLEYF) | 9.6% | 3.2% | 5.4% | 5.2% | 3.6% |
| |
|---|
| Median (10 companies) | 4.0% | 7.1% | 8.0% | 6.3% | 3.5% |
|---|
| Bharat Rasayan ($BHARATRA) | 0.2% | 3.0% | 32.9% | 41.5% | 7.1% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Madras Fertilizers ($MADRASFERT) | | 52.6% | 44.7% | 18.0% | 23.9% |
| Ginni Filaments ($GINNIFIL) | 8.1% | 11.6% | -1.0% | 15.2% | 21.6% |
| Uplbbph ($UPLBBPH) | 13.5% | 16.3% | 17.1% | 15.9% | 18.2% |
| Rane Brake Lining ($RANEBRAKE) | 14.4% | 15.3% | 14.1% | 7.9% | 11.1% |
| Jocil ($JOCIL) | 24.1% | 16.4% | 10.3% | 12.6% | 8.4% |
| |
|---|
| Median (25 companies) | 9.1% | 10.9% | 8.4% | 5.8% | 5.1% |
|---|
| Bharat Rasayan ($BHARATRA) | 16.1% | 10.0% | 22.1% | 13.7% | 21.9% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Rane Engine Valve ($RANENGIN) | 2.8x | 1.7x | 2.1x | 11.3x | 4.5x |
| Madras Fertilizers ($MADRASFERT) | 4.5x | 5.5x | 3.5x | 6.5x | 5.0x |
| Alchemist ($TURBOIN) | 3.1x | 4.7x | 8.4x | 6.4x | |
| Asleyf ($ASLEYF) | 3.1x | 2.0x | 2.5x | 5.0x | 17.8x |
| Indbulbbph ($INDBULBBPH) | | 8.5x | 4.3x | 4.8x | 5.5x |
| |
|---|
| Median (17 companies) | 1.6x | 1.8x | 2.1x | 2.3x | 2.9x |
|---|
| Bharat Rasayan ($BHARATRA) | 0.2x | 1.2x | 2.1x | 5.0x | 2.2x |
