Emami Paper Mills reports 345% CAPEX growth while 4.5% Revenue decline
06-05-2015 • About Emami Paper Mills (
$EMAMIPAP) • By InTwits
Emami Paper Mills reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Emami Paper Mills is a company in decline: FY2015 revenue growth was -4.5%, 5 years revenue CAGR was -3.2%
- Emami Paper Mills has high CAPEX intensity: 5 year average CAPEX/Revenue was 29.1%. At the same time it's in pair with industry average of 30.4%.
- CAPEX is quite volatile: 4,653 in FY2015, 1,046 in FY2014, 366 in FY2013, 1,210 in FY2012, 216 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.0%
- It operates with high leverage: Net Debt/EBITDA is 11.2x while industry average is 2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Emami Paper Mills ($EMAMIPAP) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,298 | 4,951 | 4,999 | 5,454 | 5,210 | -4.5% |
| EBITDA | 649 | 658 | 748 | 789 | 594 | -24.7% |
| Net Income | 139 | 83 | 116 | 186 | 122 | -34.6% |
Balance Sheet
|
|---|
| Cash | 26 | 216 | 734 | 1,630 | 959 | -41.2% |
| Short Term Debt | 1,089 | 2,182 | 2,107 | 1,844 | 1,098 | -40.4% |
| Long Term Debt | 2,761 | 2,917 | 2,613 | 3,712 | 6,544 | 76.3% |
Cash flow
|
|---|
| Capex | 216 | 1,210 | 366 | 1,046 | 4,653 | 344.8% |
Ratios
|
|---|
| Revenue growth | -30.0% | 15.2% | 1.0% | 9.1% | -4.5% | |
| EBITDA growth | | 1.5% | 13.7% | 5.5% | -24.7% | |
| EBITDA Margin | 15.1% | 13.3% | 15.0% | 14.5% | 11.4% | -3.1% |
| Net Income Margin | 3.2% | 1.7% | 2.3% | 3.4% | 2.3% | -1.1% |
| CAPEX, % of revenue | 5.0% | 24.4% | 7.3% | 19.2% | 89.3% | 70.1% |
| ROIC | | 5.8% | 5.9% | 5.4% | 3.0% | -2.4% |
| ROE | | 4.9% | 5.6% | 5.8% | 2.0% | -3.8% |
| Net Debt/EBITDA | 5.9x | 7.4x | 5.3x | 5.0x | 11.2x | 6.3x |
Revenue and profitability
Emami Paper Mills's Revenue decreased on 4.5% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 14.5% to 11.4% in FY2015.
Net Income marign decreased slightly on 1.1 pp from 3.4% to 2.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Emami Paper Mills had CAPEX/Revenue of 89.3%. The company's CAPEX/Revenue surged on 64.9 pp from 24.4% in FY2012 to 89.3% in FY2015. It's average CAPEX/Revenue for the last three years was 38.6%.The company has spent a lot to CAPEX (783% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.98%) and ROE (2.04%). ROIC decreased on 2.4 pp from 5.4% to 3.0% in FY2015. ROE decreased on 3.8 pp from 5.8% to 2.0% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 11.2x and Debt / EBITDA is 12.9x. Net Debt / EBITDA surged on 6.3x from 5.0x to 11.2x in FY2015. Debt surged on 37.6% in FY2015 while cash dropped on 41.2% in FY2015.
Valuation
Emami Paper Mills's trades at EV/EBITDA 15.2x and P/E 19.3x while industy averages are 10.5x and 26.1x.
Appendix 1: Peers in Paper & Paper Products
Below you can find Emami Paper Mills benchmarking vs. other companies in Paper & Paper Products 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 |
|---|
| Yash Papers ($YASHPPR) | | 9.0% | -3.6% | 39.5% | 17.3% |
| Tamil Nadu Newsprint & Papers ($TNPL) | -54.0% | 26.0% | 22.2% | 22.8% | |
| Malu Paper Mills ($MALUPAPER) | -36.5% | 0.3% | 4.9% | 22.6% | |
| Jk Paper ($JKPAPER) | -53.4% | 7.9% | 9.4% | 18.5% | |
| Shreyans Industries ($SHREYANIND) | -41.7% | 7.8% | 24.4% | 17.3% | |
| |
|---|
| Median (14 companies) | -41.7% | 8.6% | 6.6% | 7.5% | 17.3% |
|---|
| Emami Paper Mills ($EMAMIPAP) | | 15.2% | 1.0% | 9.1% | -4.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tamil Nadu Newsprint & Papers ($TNPL) | 26.2% | 21.0% | 22.2% | 22.5% | |
| Yash Papers ($YASHPPR) | 15.6% | 15.7% | 16.8% | 16.0% | 15.7% |
| Kuantum Papers ($KUANTUM) | 15.1% | 11.2% | 14.2% | 15.9% | |
| Tcpl Packaging ($TCPLPACK) | 14.7% | 16.1% | 14.9% | 15.7% | |
| Ruchira Papers ($RUCHIRA) | 13.1% | 14.7% | 17.1% | 15.2% | |
| |
|---|
| Median (10 companies) | 12.1% | 11.6% | 11.8% | 13.5% | 7.5% |
|---|
| Emami Paper Mills ($EMAMIPAP) | 15.1% | 13.3% | 15.0% | 14.5% | 11.4% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jk Paper ($JKPAPER) | 10.1% | 47.6% | 59.5% | 15.9% | |
| Tcpl Packaging ($TCPLPACK) | 12.1% | 18.3% | 8.6% | 11.1% | |
| Tamil Nadu Newsprint & Papers ($TNPL) | 23.6% | 18.9% | 10.4% | 5.5% | |
| |
|---|
| Median (3 companies) | 5.8% | 11.3% | 10.4% | 11.1% | |
|---|
| Emami Paper Mills ($EMAMIPAP) | 5.0% | 24.4% | 7.3% | 19.2% | 89.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tcpl Packaging ($TCPLPACK) | 13.3% | 15.4% | 17.4% | 16.9% | |
| Yash Papers ($YASHPPR) | 7.3% | 8.3% | 8.3% | 11.5% | |
| Tamil Nadu Newsprint & Papers ($TNPL) | 7.6% | 5.3% | 8.2% | 11.1% | |
| Jk Paper ($JKPAPER) | 15.4% | 5.2% | 2.7% | 1.1% | |
| Rama Pulp & Papers ($RAMAPULP) | | | 10.8% | | |
| |
|---|
| Median (21 companies) | 7.3% | 8.3% | 9.4% | 11.3% | |
|---|
| Emami Paper Mills ($EMAMIPAP) | | 5.8% | 5.9% | 5.4% | 3.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jk Paper ($JKPAPER) | 2.0x | 6.8x | 12.7x | 14.1x | |
| Yash Papers ($YASHPPR) | 5.7x | 5.2x | 5.5x | 4.5x | 0.0x |
| Tamil Nadu Newsprint & Papers ($TNPL) | 4.7x | 5.4x | 3.6x | 2.8x | |
| Tcpl Packaging ($TCPLPACK) | 2.6x | 2.6x | 2.3x | 2.2x | |
| Rama Pulp & Papers ($RAMAPULP) | 0.1x | 0.8x | 1.1x | 0.0x | |
| |
|---|
| Median (14 companies) | 3.9x | 3.2x | 2.7x | 0.0x | 0.0x |
|---|
| Emami Paper Mills ($EMAMIPAP) | 5.9x | 7.4x | 5.3x | 5.0x | 11.2x |
