Sqs India Bfsi Net Income dropped on 27.9% in 2015 while Revenue surged on 10.1%
23-04-2015 • About Sqs India Bfsi (
$SQSBFSI) • By InTwits
Sqs India Bfsi reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 19.4% in FY2015, 20.5% in FY2014, 18.8% in FY2013, 10.6% in FY2012, 3.4% in FY2011
- Sqs India Bfsi has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: 28.1 in FY2015, 25.3 in FY2014, 251 in FY2013, 34.7 in FY2012, 97.6 in FY2011
- The company has highly profitable business model: ROIC is at 30.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sqs India Bfsi ($SQSBFSI) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 829 | 1,214 | 1,614 | 1,944 | 2,142 | 10.1% |
| EBITDA | 28 | 129 | 303 | 399 | 416 | 4.3% |
| Net Income | 19 | 114 | 194 | 300 | 216 | -27.9% |
Balance Sheet
|
|---|
| Cash | 239 | 235 | 293 | 395 | 555 | 40.4% |
| Short Term Debt | 0 | 0 | 29 | 23 | 23 | 0.0% |
| Long Term Debt | 0 | 0 | 114 | 96 | 73 | -24.0% |
Cash flow
|
|---|
| Capex | 98 | 35 | 251 | 25 | 28 | 11.1% |
Ratios
|
|---|
| Revenue growth | -66.5% | 46.4% | 32.9% | 20.4% | 10.1% | |
| EBITDA growth | -70.5% | 354.8% | 135.2% | 31.6% | 4.3% | |
| EBITDA Margin | 3.4% | 10.6% | 18.8% | 20.5% | 19.4% | -1.1% |
| Net Income Margin | 2.3% | 9.4% | 12.0% | 15.4% | 10.1% | -5.3% |
| CAPEX, % of revenue | 11.8% | 2.9% | 15.5% | 1.3% | 1.3% | 0.0% |
| ROIC | 0.1% | 12.1% | 27.0% | 29.4% | 30.6% | 1.3% |
| ROE | 2.7% | 15.6% | 23.7% | 30.6% | 20.6% | -10.0% |
| Net Debt/EBITDA | -8.4x | -1.8x | -0.5x | -0.7x | -1.1x | -0.4x |
Revenue and profitability
Sqs India Bfsi's Revenue jumped on 10.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.8 pp from 8.6% to 10.4% in FY2015.
Net Income marign decreased on 5.3 pp from 15.4% to 10.1% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 1.3%. Sqs India Bfsi showed small CAPEX/Revenue decline of 1.5 pp from 2.9% in FY2012 to 1.3% in FY2015. For the last three years the average CAPEX/Revenue was 6.0%.
Return on investment
The company operates at high and attractive ROIC (30.64%) and ROE (20.61%). ROIC increased slightly on 1.3 pp from 29.4% to 30.6% in FY2015. ROE decreased on 10.0 pp from 30.6% to 20.6% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.1x and Debt / EBITDA is 0.2x. Net Debt / EBITDA dropped on 0.4x from -0.7x to -1.1x in FY2015. Debt dropped on 19.3% in FY2015 while cash jumped on 40.4% in FY2015.
Valuation
The company's trades at EV/EBITDA 12.8x and P/E 26.7x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 13.7x with the industry average at 4.7x.
Appendix 1: Peers in IT Consulting & Software
Below you can find Sqs India Bfsi benchmarking vs. other companies in IT Consulting & Software 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 |
|---|
| Tech Mahindra ($TECHM) | -85.8% | 6.8% | 25.2% | 174.0% | |
| Tata Consultancy Services ($TCS) | | 31.0% | 28.8% | 29.9% | 15.7% |
| Mindtree ($MINDTREE) | | 26.6% | 23.2% | 28.8% | 17.0% |
| Infinite Computer Solutions (India) ($INFINITE) | -57.9% | 19.5% | 31.7% | 24.6% | |
| Infosys ($INFY) | 20.9% | 22.7% | 19.6% | 24.2% | |
| |
|---|
| Median (21 companies) | -40.7% | 22.7% | 20.4% | 14.0% | 15.7% |
|---|
| Sqs India Bfsi ($SQSBFSI) | | 46.4% | 32.9% | 20.4% | 10.1% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Consultancy Services ($TCS) | | | | 47.4% | 42.4% |
| Mindtree ($MINDTREE) | 32.8% | 31.5% | 36.2% | | 34.8% |
| Wipro ($WIPRO) | 31.5% | 29.2% | 30.4% | 32.0% | 31.6% |
| |
|---|
| Median (3 companies) | 34.7% | 32.7% | 36.2% | 35.9% | 34.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oracle Financial Services Software ($OFSS) | 37.4% | 35.3% | 35.2% | 37.4% | |
| Tata Consultancy Services ($TCS) | 29.9% | 29.5% | 28.6% | 30.7% | 26.1% |
| Infosys ($INFY) | 32.5% | 31.6% | 27.9% | 26.3% | |
| Wipro ($WIPRO) | 21.1% | 19.1% | 20.9% | 22.4% | 22.3% |
| Tech Mahindra ($TECHM) | 19.5% | 16.7% | 20.7% | 22.2% | |
| |
|---|
| Median (18 companies) | 18.0% | 15.1% | 16.5% | 18.3% | 18.8% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 3.4% | 10.6% | 18.8% | 20.5% | 19.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ramco Systems ($RAMCOSYS) | 16.4% | | 22.1% | 15.3% | 12.4% |
| Niit Technologies ($NIITTECH) | 4.1% | 5.9% | 4.6% | 6.1% | |
| Infosys ($INFY) | 4.7% | 4.9% | 5.2% | 5.5% | |
| Mindtree ($MINDTREE) | 5.6% | 2.5% | 4.5% | 5.0% | 5.6% |
| Tech Mahindra ($TECHM) | 3.0% | 5.4% | 2.6% | 5.0% | |
| |
|---|
| Median (17 companies) | 4.0% | 3.9% | 3.2% | 3.5% | 3.0% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 11.8% | 2.9% | 15.5% | 1.3% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Consultancy Services ($TCS) | 47.1% | 48.6% | 48.4% | 50.2% | 40.5% |
| Tech Mahindra ($TECHM) | 19.2% | 15.4% | 20.1% | 43.0% | |
| Geometric ($GEOMETRIC) | 19.6% | 29.9% | 46.4% | 41.1% | |
| Mindtree ($MINDTREE) | 14.9% | 24.9% | 34.6% | 36.2% | 32.0% |
| Cmc ($CMC) | 31.5% | 26.2% | 33.2% | 35.3% | 26.0% |
| |
|---|
| Median (30 companies) | 19.2% | 19.6% | 20.4% | 22.9% | 20.8% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 0.1% | 12.1% | 27.0% | 29.4% | 30.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 3I Infotech ($3IINFOTECH) | 3.5x | 8.5x | 20.3x | 27.7x | |
| Ramco Systems ($RAMCOSYS) | 4.0x | 8.8x | | 27.6x | 4.2x |
| Starcom Information Technology ($STARCOM) | | | | 17.4x | |
| Onward Technologies ($ONWARDTEC) | 2.7x | 2.4x | 2.2x | 4.1x | |
| Kpit Technologies ($KPIT) | -0.7x | 0.3x | 0.5x | 0.7x | |
| |
|---|
| Median (23 companies) | -0.1x | -0.0x | -0.2x | -0.2x | -0.7x |
|---|
| Sqs India Bfsi ($SQSBFSI) | -8.4x | -1.8x | -0.5x | -0.7x | -1.1x |
