Idea Cellular Net Income jumped on 62.3% in 2015 and EBITDA Margin increased on 2.8 pp from 31.5% to 34.4%

28-04-2015 • About Idea Cellular ($IDEA) • By InTwits

Idea Cellular reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is expanding: 34.4% in FY2015 vs. 31.5% in FY2014 vs. 24.6% in FY2011
Idea Cellular has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.5%. At the same time it's a lot of higher than industry average of 11.7%.
CAPEX is quite volatile: 42,278 in FY2015, 36,985 in FY2014, 34,987 in FY2013, 47,327 in FY2012, 85,473 in FY2011
The company has highly profitable business model: ROIC is at 12.1%
It operates with medium-size leverage: Net Debt/EBITDA is 2.3x while industry average is 2.2x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Idea Cellular ($IDEA) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	154,384	194,887	224,074	264,320	315,269	19.3%
EBITDA	37,908	50,923	60,045	83,337	108,379	30.0%
Net Income	8,987	7,230	10,109	19,678	31,929	62.3%
Balance Sheet
Cash	4,534	1,474	1,378	1,388	15,478	1,015.2%
Short Term Debt	30,757	38,150	22,391	25,065	102,559	309.2%
Long Term Debt	89,948	95,222	118,047	181,284	166,032	-8.4%
Cash flow
Capex	85,473	47,327	34,987	36,985	42,278	14.3%
Ratios
Revenue growth	-69.4%	26.2%	15.0%	18.0%	19.3%
EBITDA growth	9.6%	34.3%	17.9%	38.8%	30.0%
EBITDA Margin	24.6%	26.1%	26.8%	31.5%	34.4%	2.8%
Net Income Margin	5.8%	3.7%	4.5%	7.4%	10.1%	2.7%
CAPEX, % of revenue	55.4%	24.3%	15.6%	14.0%	13.4%	-0.6%
ROIC	6.2%	8.1%	8.8%	11.0%	12.1%	1.1%
ROE	7.4%	5.7%	7.4%	12.8%	16.1%	3.4%
Net Debt/EBITDA	3.1x	2.6x	2.3x	2.5x	2.3x	-0.1x

Revenue and profitability

Idea Cellular's Revenue surged on 19.3% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.8 pp from 31.5% to 34.4% in FY2015.

Net Income marign increased on 2.7 pp from 7.4% to 10.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 13.4% in FY2015. Idea Cellular showed big decline in CAPEX/Revenue of 10.9 pp from 24.3% in FY2012 to 13.4% in FY2015. It's average CAPEX/Revenue for the last three years was 14.3%.

Return on investment

The company operates at good ROIC (12.09%) and ROE (16.15%). ROIC increased slightly on 1.1 pp from 11.0% to 12.1% in FY2015. ROE increased on 3.4 pp from 12.8% to 16.1% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 2.5x. Net Debt / EBITDA dropped on 0.1x from 2.5x to 2.3x in FY2015. Debt surged on 30.2% in FY2015 while cash jumped on 1,015% in FY2015.

Appendix 1: Peers in Telecom Services

Below we provide Idea Cellular benchmarking against other companies in Telecom Services 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	FY2011	FY2012	FY2013	FY2014	FY2015
Bharti Airtel ($BHARTIARTL)		20.0%	7.6%	11.5%	7.3%
Mahanagar Telephone Nigam ($MTNL)	-11.1%	-8.1%	1.6%	-0.6%
Median (2 companies)	-11.1%	5.9%	4.6%	5.5%	7.3%
Idea Cellular ($IDEA)		26.2%	15.0%	18.0%	19.3%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharti Airtel ($BHARTIARTL)	33.7%	33.2%	30.2%	32.4%	34.1%
Mahanagar Telephone Nigam ($MTNL)	-31.5%	-52.0%	-82.7%	-25.1%
Median (2 companies)	1.1%	-9.4%	-26.2%	3.7%	34.1%
Idea Cellular ($IDEA)	24.6%	26.1%	26.8%	31.5%	34.4%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharti Airtel ($BHARTIARTL)	18.5%	20.2%	16.3%	13.3%	15.9%
Mahanagar Telephone Nigam ($MTNL)	33.8%	21.9%	21.1%	5.7%
Median (2 companies)	26.1%	21.0%	18.7%	9.5%	15.9%
Idea Cellular ($IDEA)	55.4%	24.3%	15.6%	14.0%	13.4%

Top companies by ROIC, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharti Airtel ($BHARTIARTL)	11.8%	8.9%	7.0%	9.4%	11.7%
Mahanagar Telephone Nigam ($MTNL)	-19.9%	-24.0%	-39.1%	-14.0%
Median (2 companies)	-4.1%	-7.6%	-16.1%	-2.3%	11.7%
Idea Cellular ($IDEA)	6.2%	8.1%	8.8%	11.0%	12.1%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharti Airtel ($BHARTIARTL)	3.0x	2.8x	2.8x	2.6x	2.1x
Median (1 company)	3.0x	2.8x	2.8x	2.6x	2.1x
Idea Cellular ($IDEA)	3.1x	2.6x	2.3x	2.5x	2.3x

Idea Cellular stock price chart

Idea Cellular financials

mln.	FY2010	FY2011	FY2012

Revenue	504,629	154,384	194,887
EBITDA	34,591	37,908	50,923
Net income	9,539	8,987	7,230
CAPEX	41,580	85,473	47,327
Debt	78,593	120,705	133,372
Cash	2,900	4,534	1,474

About Idea Cellular

Idea Cellular Limited provides GSM based mobile services and related telephony services to individuals and businesses in India. The company operates through three segments: Mobility Services, International Long Distance (ILD), and Passive Infrastructure. It offers 2G and 3G services that comprise roaming arrangements; ILD and other services; and a range of mobile broadband devices, including dongles and 3G smartphones that provide 3G applications and data services comprising Idea TV, games, social networking, etc., as well as mobile apps and games, and dialer tone services. The company also provides prepaid, postpaid, mobile Internet, and roaming services; mobile banking services; and passive infrastructure services, as well as sells handsets and data cards. In addition, it offers voice based services that comprise Idea ConCall, an audio conferencing service; hosted IVR solution that helps enterprises to manage various business processes; and toll free solution, as well as mobile number portability service. Further, the company provides field force automation solution, a mobile CRM tool that helps to speed up and streamline various phases of business comprising prospecting, lead management, sales tracking, stock, services, and order management; and !-SAFE, a secured connectivity solution that provides secured wireless connectivity between remote employees connected through 2G/3G data connectivity and enterprise Intranet/Internet servers. Additionally, it offers work force tracking solution, a location based service that helps enterprises with remote workers to manage work force. As of May 29, 2014, Idea Cellular Limited had approximately 137 million subscribers. The company was formerly known as Birla Tata AT&T Limited and changed its name to Idea Cellular Limited in 2002. Idea Cellular Limited was incorporated in 1995 and is based in Mumbai, India.