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L.G.Balakrishnan & Bros CAPEX jumped on 56.7% in 2015 and Revenue increased on 5.8%

30-04-2015 • About L.G.Balakrishnan & Bros ($LGBBROSLTD) • By InTwits

L.G.Balakrishnan & Bros reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • L.G.Balakrishnan & Bros has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.0%. At the same time it's a lot of higher than industry average of 5.0%.
  • CAPEX is quite volatile: 1,048 in FY2015, 669 in FY2014, 617 in FY2013, 322 in FY2012, 702 in FY2011
  • The company has highly profitable business model: ROIC is at 21.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

L.G.Balakrishnan & Bros ($LGBBROSLTD) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue7,1479,1279,56211,08611,7305.8%
EBITDA9001,0789001,2611,48417.7%
Net Income46644232762871213.3%
Balance Sheet
Cash315298606813.3%
Short Term Debt44357356763578022.8%
Long Term Debt73857186166099350.5%
Cash flow
Capex7023226176691,04856.7%
Ratios
Revenue growth-48.0%27.7%4.8%15.9%5.8%
EBITDA growth15.8%19.9%-16.5%40.2%17.7%
EBITDA Margin12.6%11.8%9.4%11.4%12.7%1.3%
Net Income Margin6.5%4.8%3.4%5.7%6.1%0.4%
CAPEX, % of revenue9.8%3.5%6.5%6.0%8.9%2.9%
ROIC20.3%22.6%15.2%21.0%21.0%0.0%
ROE26.1%20.6%13.3%22.2%21.2%-1.0%
Net Debt/EBITDA1.3x1.0x1.5x1.0x1.1x0.2x

Revenue and profitability


L.G.Balakrishnan & Bros's Revenue increased on 5.8% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.4 pp from 18.8% to 20.2% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments


In FY2015 L.G.Balakrishnan & Bros had CAPEX/Revenue of 8.9%. The company's CAPEX/Revenue increased on 5.4 pp from 3.5% in FY2012 to 8.9% in FY2015. It's average CAPEX/Revenue for the last three years was 7.1%.L.G.Balakrishnan & Bros invested a large share of EBITDA (70.6%) to CAPEX.

Return on investment


The company operates at high and attractive ROIC (21.00%) and ROE (21.18%). ROIC showed almost no change in FY2015. ROE decreased slightly on 1.0 pp from 22.2% to 21.2% in FY2015.

Leverage (Debt)


Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.2x. Net Debt / EBITDA jumped on 0.2x from 1.0x to 1.1x in FY2015. Debt jumped on 36.9% in FY2015 while cash jumped on 13.3% in FY2015.

Valuation


L.G.Balakrishnan & Bros's trades at EV/EBITDA 6.2x and P/E 10.5x while industy averages are 10.5x and 26.1x. L.G.Balakrishnan & Bros's EV/(EBITDA-CAPEX) is 21.1x with the industry average at 4.7x.

Appendix 1: Peers in Auto Parts & Equipment


Below we provide L.G.Balakrishnan & Bros benchmarking against other companies in Auto Parts & Equipment 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
Exide Industries ($EXIDEIND)11.5%19.7%30.6%14.8%
Motherson Sumi Systems ($MOTHERSUMI)-86.4%79.1%71.3%20.2%
Fiem Industries ($FIEMIND)-54.4%25.2%13.4%18.7%
Suprajit Engineering ($SUPRAJIT)-53.1%22.2%9.4%17.9%
Amara Raja Batteries ($AMARAJABAT)-66.9%34.3%25.1%16.1%
 
Median (35 companies)-35.9%16.9%2.4%4.9%0.8%
L.G.Balakrishnan & Bros ($LGBBROSLTD)27.7%4.8%15.9%5.8%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Tube Investments Of India ($TUBEINVEST)33.7%18.4%24.4%28.3%
Shanthi Gears ($SHANTIGEAR)44.6%37.9%30.2%27.8%12.0%
Amtek Auto ($AMTEKAUTO)25.1%20.7%14.8%
Shivam Autotech ($SHIVAMAUTO)23.2%24.1%24.1%20.6%
Suprajit Engineering ($SUPRAJIT)16.5%16.2%17.0%17.2%
 
Median (34 companies)10.8%10.8%9.9%10.1%12.0%
L.G.Balakrishnan & Bros ($LGBBROSLTD)12.6%11.8%9.4%11.4%12.7%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Amtek Auto ($AMTEKAUTO)18.9%27.1%30.3%
Amara Raja Batteries ($AMARAJABAT)2.9%3.7%2.5%10.9%
Subros ($SUBROS)11.6%16.6%10.7%9.3%
Lumax Auto Technologies ($LUMAXTECH)3.7%5.1%7.3%7.8%
Sona Koyo Steering Systems ($SONASTEER)5.9%9.8%6.6%7.1%
 
Median (24 companies)7.6%5.8%4.5%4.8%4.0%
L.G.Balakrishnan & Bros ($LGBBROSLTD)9.8%3.5%6.5%6.0%8.9%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Amara Raja Batteries ($AMARAJABAT)30.5%32.1%34.5%30.3%
Exide Industries ($EXIDEIND)34.2%24.2%24.3%29.5%26.9%
Suprajit Engineering ($SUPRAJIT)32.4%31.8%28.0%26.1%
Motherson Sumi Systems ($MOTHERSUMI)23.7%13.5%16.5%25.0%
Munjal Showa ($MUNJALSHOW)18.8%29.9%23.8%22.5%
 
Median (48 companies)15.2%15.7%11.8%12.7%5.4%
L.G.Balakrishnan & Bros ($LGBBROSLTD)20.3%22.6%15.2%21.0%21.0%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Tube Investments Of India ($TUBEINVEST)8.1x17.6x17.8x17.3x
Autoline Industries ($AUTOIND)3.1x3.2x4.0x12.0x
Reil Electricals India ($REILELEC)-0.1x-0.0x1.5x9.1x
Steel Strips Wheels ($SSWL)4.6x5.4x6.3x6.5x5.6x
Automotive Stampings & Assemblies ($ASAL)1.8x1.1x3.9x6.3x
 
Median (44 companies)2.2x1.3x2.2x0.7x2.8x
L.G.Balakrishnan & Bros ($LGBBROSLTD)1.3x1.0x1.5x1.0x1.1x


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