Mahindra & Mahindra Financial Services revenue growth decelerated to 14.3% in FY2015 vs. 28.9% a year earliner
23-04-2015 • About Mahindra & Mahindra Financial Services (
$M&MFIN) • By InTwits
Mahindra & Mahindra Financial Services reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Mahindra & Mahindra Financial Services has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 1.4%.
- CAPEX is quite volatile: 2,238 in FY2015, 1,935 in FY2014, 5,851 in FY2013, 10,097 in FY2012, 5,450 in FY2011
- The company has potentially unprofitable business model: ROIC is at 4.2%
- It operates with high leverage: Net Debt/EBITDA is 7.0x while industry average is 3.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Mahindra & Mahindra Financial Services ($M&MFIN) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 20,743 | 29,084 | 41,130 | 53,005 | 60,608 | 14.3% |
| EBITDA | 14,140 | 21,195 | 30,164 | 37,685 | 40,883 | 8.5% |
| Net Income | 4,928 | 6,435 | 9,270 | 9,544 | 9,129 | -4.3% |
Balance Sheet
|
|---|
| Cash | 3,236 | 2,554 | 3,673 | 5,153 | 4,931 | -4.3% |
| Short Term Debt | 34,968 | 47,354 | 63,371 | 76,392 | 123,665 | 61.9% |
| Long Term Debt | 62,878 | 99,110 | 138,154 | 182,538 | 168,652 | -7.6% |
Cash flow
|
|---|
| Capex | 522 | 413 | 349 | 412 | 447 | 8.6% |
Ratios
|
|---|
| Revenue growth | -72.6% | 40.2% | 41.4% | 28.9% | 14.3% | |
| EBITDA growth | 30.6% | 49.9% | 42.3% | 24.9% | 8.5% | |
| EBITDA Margin | 68.2% | 72.9% | 73.3% | 71.1% | 67.5% | -3.6% |
| Net Income Margin | 23.8% | 22.1% | 22.5% | 18.0% | 15.1% | -2.9% |
| CAPEX, % of revenue | 2.5% | 1.4% | 0.8% | 0.8% | 0.7% | -0.0% |
| ROIC | 7.3% | 6.4% | 6.3% | 5.3% | 4.2% | -1.0% |
| ROE | 22.9% | 23.1% | 24.4% | 19.3% | 16.2% | -3.1% |
| Net Debt/EBITDA | 6.7x | 6.8x | 6.6x | 6.7x | 7.0x | 0.3x |
Revenue and profitability
The company's Revenue jumped on 14.3% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 3.6 pp from 71.1% to 67.5% in FY2015.
Net Income marign decreased on 2.9 pp from 18.0% to 15.1% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Mahindra & Mahindra Financial Services had CAPEX/Revenue of 0.74%. Mahindra & Mahindra Financial Services showed small CAPEX/Revenue decline of 0.68 pp from 1.4% in FY2012 to 0.74% in FY2015. It's average CAPEX/Revenue for the last three years was 0.79%.
Return on investment
The company operates at good ROE (16.25%) while ROIC is low (4.23%). ROIC decreased slightly on 1.0 pp from 5.3% to 4.2% in FY2015. ROE decreased on 3.1 pp from 19.3% to 16.2% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.0x and Debt / EBITDA is 7.2x. Net Debt / EBITDA jumped on 0.3x from 6.7x to 7.0x in FY2015. Debt jumped on 12.9% in FY2015 while cash decreased on 4.3% in FY2015.
Valuation
Mahindra & Mahindra Financial Services's trades at EV/EBITDA 10.9x and P/E 17.5x while industy averages are 10.5x and 26.1x. Mahindra & Mahindra Financial Services's EV/(EBITDA-CAPEX) is 11.1x with the industry average at 4.7x.
Appendix 1: Peers in Finance (including NBFCs)
Below you can find Mahindra & Mahindra Financial Services benchmarking vs. other companies in Finance (including NBFCs) 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, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Advance Powerinfra Tech ($ADVPOWER) | | | | 209.3% | |
| Vishwamitra Financial Services ($VISHWAFIN) | | | 65.2% | 118.5% | |
| Industrial Investment Trust ($IITL) | -88.9% | 119.2% | 72.5% | 76.4% | |
| Sks Microfinance ($SKSMICRO) | 36.7% | -62.8% | -25.6% | 55.0% | |
| Muthoot Capital Services ($MUTHTFN) | -83.3% | 81.1% | 59.3% | 48.1% | |
| |
|---|
| Median (23 companies) | -51.6% | 23.2% | 24.4% | 19.8% | -13.2% |
|---|
| Mahindra & Mahindra Financial Services ($M&MFIN) | | 40.2% | 41.4% | 28.9% | 14.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Rural Electrification Corporation ($RECLTD) | 97.1% | 97.2% | 97.3% | 96.7% | |
| Pnb Gilts ($PNBGILTS) | 91.8% | 94.0% | 96.4% | 96.4% | |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 98.7% | 96.2% | 95.5% | 94.4% | |
| IDFC Limited ($IDFC) | 85.3% | 88.1% | 89.6% | 87.0% | |
| Srei Infrastructure Finance ($SREINFRA) | 78.5% | 80.6% | 83.9% | 83.7% | |
| |
|---|
| Median (24 companies) | 69.5% | 64.8% | 65.4% | 65.5% | 65.1% |
|---|
| Mahindra & Mahindra Financial Services ($M&MFIN) | 68.2% | 72.9% | 73.3% | 71.1% | 67.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Srei Infrastructure Finance ($SREINFRA) | 34.8% | 29.3% | 8.3% | 12.6% | |
| Clarus Finance & Securities ($CLARUS) | | | | 6.9% | |
| Industrial Investment Trust ($IITL) | 3.7% | 1.1% | 0.3% | 4.9% | |
| Fortune Financial Services (India) ($FORTUNEF) | 5.5% | 1.0% | 1.3% | 4.5% | |
| A.K.Capital Services ($AKCAPIT) | 1.9% | 0.3% | 2.9% | 4.1% | |
| |
|---|
| Median (20 companies) | 1.7% | 0.6% | 0.7% | 1.1% | 0.7% |
|---|
| Mahindra & Mahindra Financial Services ($M&MFIN) | 2.5% | 1.4% | 0.8% | 0.8% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Motilal Oswal Financial Services ($MOTILALOFS) | | | 12.0% | 9.7% | |
| Shriram City Union Finance ($SHRIRAMCIT) | | 6.1% | 5.8% | 5.8% | |
| Rural Electrification Corporation ($RECLTD) | | | 4.7% | 5.2% | |
| IDFC Limited ($IDFC) | 4.8% | 4.8% | 5.0% | 4.3% | |
| Sks Microfinance ($SKSMICRO) | | | | 4.1% | |
| |
|---|
| Median (52 companies) | 4.8% | 3.6% | 4.4% | 3.8% | |
|---|
| Mahindra & Mahindra Financial Services ($M&MFIN) | 7.3% | 6.4% | 6.3% | 5.3% | 4.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pnb Gilts ($PNBGILTS) | 9.0x | 14.2x | 11.2x | 11.3x | |
| Fortune Financial Services (India) ($FORTUNEF) | 4.7x | 9.0x | | 10.8x | |
| Vibrant Global Capital ($VGCL) | 7.8x | 23.1x | 32.8x | 10.7x | |
| Rural Electrification Corporation ($RECLTD) | 8.1x | 8.3x | 8.0x | 7.5x | |
| Srei Infrastructure Finance ($SREINFRA) | 6.4x | 7.0x | 6.2x | 7.5x | |
| |
|---|
| Median (39 companies) | 2.6x | 4.4x | 3.6x | 2.9x | 3.2x |
|---|
| Mahindra & Mahindra Financial Services ($M&MFIN) | 6.7x | 6.8x | 6.6x | 6.7x | 7.0x |
