Kajaria Ceramics reports 72.0% CAPEX growth and 19.1% Revenue growth

29-04-2015 • About Kajaria Ceramics ($KAJARIACER) • By InTwits

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

• EBITDA Margin is relatively stable: 16.3% in FY2015 vs. 15.6% in FY2014 vs. 15.8% in FY2011
• Kajaria Ceramics has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.7%. At the same time it's a lot of higher than industry average of 5.7%.
• CAPEX is quite volatile: 2,696 in FY2015, 1,568 in FY2014, 1,543 in FY2013, 751 in FY2012, 1,668 in FY2011
• The company has highly profitable business model: ROIC is at 29.8%

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

Kajaria Ceramics ($KAJARIACER) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	9,532	13,130	16,120	18,363	21,869	19.1%
EBITDA	1,502	2,081	2,467	2,862	3,555	24.2%
Net Income	606	809	1,045	1,242	1,756	41.4%
Balance Sheet
Cash	34	8	6	51	98	91.4%
Short Term Debt	1,863	1,865	2,309	1,513	1,470	-2.8%
Long Term Debt	1,016	917	893	851	964	13.2%
Cash flow
Capex	1,668	751	1,543	1,568	2,696	72.0%
Ratios
Revenue growth	-64.3%	37.7%	22.8%	13.9%	19.1%
EBITDA growth		38.6%	18.5%	16.0%	24.2%
EBITDA Margin	15.8%	15.8%	15.3%	15.6%	16.3%	0.7%
Net Income Margin	6.4%	6.2%	6.5%	6.8%	8.0%	1.3%
CAPEX, % of revenue	17.5%	5.7%	9.6%	8.5%	12.3%	3.8%
ROIC		27.9%	28.6%	28.8%	29.8%	1.0%
ROE		32.1%	32.5%	27.9%	27.6%	-0.3%
Net Debt/EBITDA	1.9x	1.3x	1.3x	0.8x	0.7x	-0.2x

Revenue and profitability

The company's Revenue surged on 19.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.6 pp from 0.71% to 3.3% in FY2015.

Net Income marign increased slightly on 1.3 pp from 6.8% to 8.0% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 12.3% in FY2015. CAPEX/Revenue increased on 6.6 pp from 5.7% in FY2012 to 12.3% in FY2015. It's average level of CAPEX/Revenue for the last three years was 10.1%.To maintain this fast growth Kajaria Ceramics invested a large share of EBITDA (75.8%) to CAPEX.

Return on investment

The company operates at high and attractive ROIC (29.79%) and ROE (27.64%). ROIC increased slightly on 0.96 pp from 28.8% to 29.8% in FY2015. ROE showed almost no change in FY2015.

Leverage (Debt)

Debt level is 0.7x Net Debt / EBITDA and 0.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 0.8x to 0.7x in FY2015. Debt increased on 3.0% in FY2015 while cash jumped on 91.4% in FY2015.

Appendix 1: Peers in Furniture-Furnishing-Paints

Below we provide Kajaria Ceramics benchmarking against other companies in Furniture-Furnishing-Paints 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	FY2011	FY2012	FY2013	FY2014	FY2015
Asian Paints ($ASIANPAINT)	-62.1%	24.8%	13.3%	15.7%
Murudeshwar Ceramics ($MURUDCERA)	10.1%	3.6%	-19.5%	1.3%
Nitco ($NITCO)	-33.7%	31.0%	-8.1%	0.1%
Shalimar Paints ($SHALPAINTS)	-21.8%	19.5%	2.5%	-3.2%
Hanung Toys & Textiles ($HANUNG)	630.6%	24.6%	27.6%	-73.8%
Median (5 companies)	-21.8%	24.6%	2.5%	0.1%
Kajaria Ceramics ($KAJARIACER)		37.7%	22.8%	13.9%	19.1%

Top companies by EBITDA margin, %

Top	FY2011	FY2012	FY2013	FY2014	FY2015
Murudeshwar Ceramics ($MURUDCERA)	30.6%	23.6%	21.8%	21.6%
Asian Paints ($ASIANPAINT)	17.3%	16.0%	16.0%	16.0%
Shalimar Paints ($SHALPAINTS)	7.2%	7.8%	7.6%	3.0%
Hanung Toys & Textiles ($HANUNG)	21.2%	21.7%	20.0%	-83.2%
Median (4 companies)	17.3%	16.0%	16.0%	9.5%
Kajaria Ceramics ($KAJARIACER)	15.8%	15.8%	15.3%	15.6%	16.3%

Top companies by CAPEX/Revenue, %

Top	FY2011	FY2012	FY2013	FY2014	FY2015
Shalimar Paints ($SHALPAINTS)	1.3%	0.7%	2.1%	2.8%
Asian Paints ($ASIANPAINT)	2.0%	5.7%	5.9%	2.0%
Median (2 companies)	5.9%	5.7%	5.8%	2.4%
Kajaria Ceramics ($KAJARIACER)	17.5%	5.7%	9.6%	8.5%	12.3%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Asian Paints ($ASIANPAINT)	50.4%	47.1%	43.0%	39.8%
Shalimar Paints ($SHALPAINTS)	23.6%	25.9%	22.2%	6.2%
Hanung Toys & Textiles ($HANUNG)	17.2%	15.6%	13.6%	-18.4%
Bil Continental ($BILCONTI)			4.4%
Neycer India ($NEYCERI)			-6.5%
Median (10 companies)	15.0%	10.7%	4.7%	6.2%
Kajaria Ceramics ($KAJARIACER)		27.9%	28.6%	28.8%	29.8%

Top companies by Net Debt / EBITDA

Top	FY2011	FY2012	FY2013	FY2014	FY2015
Shalimar Paints ($SHALPAINTS)	1.7x	1.5x	1.9x	7.3x
Asian Paints ($ASIANPAINT)	0.1x	0.1x	-0.0x	0.0x
Bil Continental ($BILCONTI)		7.9x	7.0x	0.0x
Murudeshwar Ceramics ($MURUDCERA)	2.6x	3.2x	4.1x	0.0x
Median (4 companies)	3.3x	6.2x	4.3x	0.0x
Kajaria Ceramics ($KAJARIACER)	1.9x	1.3x	1.3x	0.8x	0.7x

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