Raymond revenue growth accelerated from 11.8% in FY2014 to 17.3% in FY2015

29-04-2015 • About Raymond ($RAYMOND) • By InTwits

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

Raymond has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's in pair with industry average of 5.7%.
CAPEX is quite volatile: 591 in FY2015, 774 in FY2014, 9,915 in FY2013, 1,021 in FY2012, 1,841 in FY2011
The company has business model with low profitability: ROIC is at 7.6%
It operates with high leverage: Net Debt/EBITDA is 4.1x while industry average is 2.0x

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

Raymond ($RAYMOND) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	30,434	36,424	40,692	45,480	53,326	17.3%
SG&A					4,154
EBITDA	4,147	4,601	3,732	4,988	4,275	-14.3%
Net Income	537	1,558	287	1,076	1,128	4.8%
Balance Sheet
Cash	295	289	310	476	1,231	158.6%
Short Term Debt	3,804	8,627	9,367	7,828	9,307	18.9%
Long Term Debt	10,349	8,839	8,165	11,178	9,503	-15.0%
Cash flow
Capex	1,379	2,461	2,103	1,276	2,306	80.8%
Ratios
Revenue growth	-50.9%	19.7%	11.7%	11.8%	17.3%
EBITDA growth	51.3%	11.0%	-18.9%	33.6%	-14.3%
EBITDA Margin	13.6%	12.6%	9.2%	11.0%	8.0%	-3.0%
Net Income Margin	1.8%	4.3%	0.7%	2.4%	2.1%	-0.3%
SG&A, % of revenue					7.8%	7.8%
CAPEX, % of revenue	4.5%	6.8%	5.2%	2.8%	4.3%	1.5%
ROIC	9.2%	10.2%	5.9%	9.2%	7.6%	-1.6%
ROE	4.5%	12.1%	2.1%	7.6%	7.5%	-0.1%
Net Debt/EBITDA	3.3x	3.7x	4.6x	3.7x	4.1x	0.4x

Revenue and profitability

The company's Revenue surged on 17.3% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.1 pp from 8.4% to 7.3% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Raymond had CAPEX/Revenue of 4.3%. CAPEX/Revenue decreased on 2.4 pp from 6.8% in FY2012 to 4.3% in FY2015. It's average CAPEX/Revenue for the last three years was 4.1%.To deliver this fast growth the company invested a large share of EBITDA (54.0%) to CAPEX.

Return on investment

The company operates at low ROIC (7.61%) and ROE (7.50%). ROIC decreased slightly on 1.6 pp from 9.2% to 7.6% in FY2015. ROE showed almost no change in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 4.1x and Debt / EBITDA is 4.4x. Net Debt / EBITDA surged on 0.4x from 3.7x to 4.1x in FY2015. Debt decreased slightly on 1.0% in FY2015 while cash jumped on 159% in FY2015.

Valuation

The company's trades at EV/EBITDA 10.6x and P/E 24.4x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 22.9x with the industry average at 4.7x.

Management team

The company's CEO Gautam Hari Singhania has spent 18 years at the company.

Appendix 1: Peers in Textiles

Below you can find Raymond benchmarking vs. other companies in Textiles 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
Olympia Industries ($OLYMPTX)	-99.6%	-58.0%	-96.6%	74,809.1%
Gujarat Cotex ($GUJCOTEX)	625.9%	-6.2%	-66.0%	176.2%
T T ($TTL)	-39.2%	-21.8%	28.7%	47.8%
Filatex India ($FILATEX)	-74.3%	-2.7%	158.7%	44.5%
Gtn Textiles ($GTNTEX)	-27.7%	-8.8%	51.2%	39.4%
Median (73 companies)	-32.8%	4.8%	9.3%	14.4%	12.4%
Raymond ($RAYMOND)		19.7%	11.7%	11.8%	17.3%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Ruby Mills ($RUBYMILLS)	25.2%	28.3%	25.1%	28.6%
Vardhman Textiles ($VTL)	24.9%	13.8%	20.1%	24.3%
Welspun India ($WELSPUNIND)	13.3%	12.2%	16.8%	22.6%	24.1%
Nitin Spinners ($NITINSPIN)	23.7%	10.5%	19.7%	19.3%
Shri Dinesh Mills ($SHRIDINE)	24.7%	22.4%	18.5%	18.7%
Median (53 companies)	12.7%	6.3%	9.5%	9.5%	24.1%
Raymond ($RAYMOND)	13.6%	12.6%	9.2%	11.0%	8.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jindal Worldwide ($JINDWORLD)	3.6%	3.0%	10.5%	20.7%
SRF ($SRF)	0.0%	0.0%	18.7%	20.0%
Welspun India ($WELSPUNIND)	11.3%	5.6%	7.8%	16.4%	10.9%
Sel Manufacturing Company ($SELMCL)	54.2%	53.9%	25.1%	14.0%
Grasim Industries ($GRASIM)	7.8%	17.7%	21.7%	11.6%
Median (20 companies)	4.5%	3.0%	5.9%	7.4%	10.9%
Raymond ($RAYMOND)	4.5%	6.8%	5.2%	2.8%	4.3%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Nitin Spinners ($NITINSPIN)	13.8%	6.0%	19.5%	21.5%
Sutlej Textiles & Industries ($SUTLEJTEX)	16.0%	9.5%	13.6%	19.8%
Vardhman Textiles ($VTL)	15.5%	6.6%	11.9%	17.3%
Maral Overseas ($MARALOVER)		4.6%	14.1%	16.0%
Rswm ($RSWM)	17.4%	2.2%	15.2%	15.5%
Median (126 companies)	10.1%	3.5%	9.3%	9.3%	21.9%
Raymond ($RAYMOND)	9.2%	10.2%	5.9%	9.2%	7.6%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaybharat Textiles & Real Estate ($JAYTEX)	8.4x	10.9x	53.6x	23.8x
Sree Jayalakshmi Autospin ($SREEJAYA)	3.4x		9.7x	12.8x
Bombay Rayon Fashions ($BRFL)	5.9x	4.9x	4.9x	11.6x
Sel Manufacturing Company ($SELMCL)	5.6x	9.4x	6.6x	11.5x
Ruby Mills ($RUBYMILLS)	15.9x	12.6x	15.3x	10.8x
Median (69 companies)	3.9x	3.8x	3.2x	0.0x	2.2x
Raymond ($RAYMOND)	3.3x	3.7x	4.6x	3.7x	4.1x

Raymond stock price chart

Raymond financials

mln.	FY2010	FY2011	FY2012

Revenue	62,024	30,434	36,424
EBITDA	2,740	4,147	4,601
Net income	-459.465	536.9	1,558
CAPEX	1,184	1,379	2,461
Debt	16,921	14,153	17,466
Cash	308.5	295.3	288.7

About Raymond

Raymond Limited manufactures and sells worsted fabric products in India and internationally. The company conducts its operations through Textile, Denim and Shirting, Apparel, Garmenting, Tools and Hardware, Auto Components, and Others segments. It offers pure-wool, wool-blended, and premium polyester viscose worsted suiting; suiting using wool, polyester, and other specialty fibers, such as cashmere, angora, alpaca, pure silk, and linen; denim and shirting fabrics; jackets and trousers, jeans wear, and formal shirts; woolen blankets and shawls; home, auto, and institutional furnishings; and corporate wear. The company provides its fabric and apparel products under the Raymond, Raymond Premium Apparel, Park Avenue, ColorPlus, Parx, Makers, and Notting Hill brands. It also offers machinist's, saw, rasp, special, needle, and diamond coated needle files; cutting tools; hand tools comprising pliers, adjustable wrench, pipe wrench, screw driver, hammers, spanners, etc.; and auto component, including starter ring gears, flexplate flywheel assemblies, profile sheet formed metal pulleys, and integral shaft water pump bearings. In addition, the company provides a range of air charter services, such as domestic and international long distance travel on business jet aircraft, emergency stretcher services on helicopters, aerial sight seeing tours and joyrides, visits to places of pilgrimage, factory visits, film shootings, flower dropping, and aerial photography/survey, as well as flight assistance, aviation consultancy, operational management of aircraft, and helicopter maintenance services. Further, it is involved in the real estate development activities. As of March 31, 2014, the company had 946 retail stores. Raymond Limited also exports its products. The company was founded in 1925 and is headquartered in Mumbai, India.