Sangam (India) CAPEX jumped on 160% in 2015 and Revenue increased on 2.5%

04-05-2015 • About Sangam (India) ($SANGAMIND) • By InTwits

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

The company has highly profitable business model: ROIC is at 12.8%
It operates with high leverage: Net Debt/EBITDA is 2.9x 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.

Sangam (India) ($SANGAMIND) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	11,715	14,172	14,788	14,326	14,687	2.5%
EBITDA	2,038	1,604	2,145	1,889	2,089	10.6%
Net Income	566	171	513	405	516	27.3%
Balance Sheet
Cash	102	90	82	30	37	21.8%
Short Term Debt	2,368	2,075	2,196	3,160	3,590	13.6%
Long Term Debt	4,061	4,441	3,449	2,759	2,578	-6.6%
Cash flow
Capex	481	1,609		379	988	160.4%
Ratios
Revenue growth	-32.7%	21.0%	4.3%	-3.1%	2.5%
EBITDA growth	56.6%	-21.3%	33.7%	-11.9%	10.6%
EBITDA Margin	17.4%	11.3%	14.5%	13.2%	14.2%	1.0%
Net Income Margin	4.8%	1.2%	3.5%	2.8%	3.5%	0.7%
CAPEX, % of revenue	4.1%	11.3%		2.6%	6.7%	4.1%
ROIC	15.1%	9.8%	14.7%	12.2%	12.8%	0.7%
ROE	26.4%	6.9%	18.7%	12.9%	14.7%	1.8%
Net Debt/EBITDA	3.1x	4.0x	2.6x	3.1x	2.9x	-0.2x

Revenue and profitability

Sangam (India)'s Revenue increased on 2.5% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.6 pp from 2.4% to 5.0% in FY2015.

Net Income marign increased slightly on 0.68 pp from 2.8% to 3.5% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 6.7%. Sangam (India)'s CAPEX/Revenue decreased on 4.6 pp from 11.3% in FY2012 to 6.7% in FY2015.

Return on investment

The company operates at good ROIC (12.84%) and ROE (14.67%). ROIC increased slightly on 0.67 pp from 12.2% to 12.8% in FY2015. ROE increased slightly on 1.8 pp from 12.9% to 14.7% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.9x and Debt / EBITDA is 3.0x. Net Debt / EBITDA dropped on 0.2x from 3.1x to 2.9x in FY2015. Debt increased on 4.2% in FY2015 while cash jumped on 21.8% in FY2015.

Valuation

Sangam (India)'s trades at EV/EBITDA 4.5x and P/E 6.5x while industy averages are 10.5x and 26.1x.

Appendix 1: Peers in Textiles

Below you can find Sangam (India) 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 ($GTNTEX)	-27.7%	-8.8%	51.2%	39.4%
Median (73 companies)	-32.1%	4.8%	10.0%	14.4%	14.5%
Sangam (India) ($SANGAMIND)		21.0%	4.3%	-3.1%	2.5%

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%	17.0%
Shri Dinesh Mills ($SHRIDINE)	24.7%	22.4%	18.5%	18.7%
Median (53 companies)	12.7%	6.3%	9.5%	9.5%	15.9%
Sangam (India) ($SANGAMIND)	17.4%	11.3%	14.5%	13.2%	14.2%

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 ($GRASIM)	7.8%	17.7%	21.7%	11.6%	10.2%
Median (20 companies)	4.5%	3.0%	5.6%	7.4%	10.6%
Sangam (India) ($SANGAMIND)	4.1%	11.3%		2.6%	6.7%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Nitin Spinners ($NITINSPIN)	13.8%	6.0%	19.5%	21.5%	17.5%
Sutlej Textiles & Industries ($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 ($RSWM)	17.4%	2.2%	15.2%	15.5%
Median (126 companies)	10.1%	3.5%	9.0%	8.9%	12.8%
Sangam (India) ($SANGAMIND)	15.1%	9.8%	14.7%	12.2%	12.8%

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 ($RUBYMILLS)	15.9x	12.6x	15.3x	10.8x
Median (69 companies)	3.9x	3.8x	3.2x	0.0x	2.3x
Sangam (India) ($SANGAMIND)	3.1x	4.0x	2.6x	3.1x	2.9x

Sangam (India) stock price chart

Sangam (India) financials

mln.	FY2010	FY2011	FY2012

Revenue	17,412	11,715	14,172
EBITDA	1,301	2,038	1,604
Net income	171.5	565.9	170.8
CAPEX	287.5	480.5	1,609
Debt	6,926	6,429	6,516
Cash	1,268	101.9	89.900

About Sangam (India)

Sangam (India) Limited manufactures and sells textile products primarily in India. It offers polyester viscose (PV), PV-dyed, synthetic and blended dyed/grey spun, texturised, and cotton yarns; PV, processed, synthetics blended, denim, and knitted fabrics; and branded suitings. The company markets its products under the Sangam Suitings, Sangam Denims, and Sangam Yarns brands through a network of dealers and retailers. Sangam (India) Limited also exports its products to Turkey, Portugal, Egypt, China, Poland, Brazil, Germany, Belgium, Chile, Italy, Australia, Japan, the United Kingdom, the United States, the United Arab Emirates, South Africa, etc. It primarily serves textile companies. The company also operates wind power plants of 5 megawatts at Jaisalmer. Sangam (India) Limited was founded in 1984 and is headquartered in Mumbai, India.