Lkp Finance reports 604% Net Income growth while 1.1 pp EBITDA Margin decline from 32.3% to 31.2%

06-05-2015 • About Lkp Finance ($LKPFIN) • By InTwits

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

Lkp Finance has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 4.7%.
CAPEX is quite volatile: 15.3 in FY2015, 29.6 in FY2014, 12.5 in FY2013, 23.2 in FY2012, 11.8 in FY2011
It operates with high leverage: Net Debt/EBITDA is 3.5x while industry average is 1.6x

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

Lkp Finance ($LKPFIN) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	1,003	652	787	754	1,431	89.8%
EBITDA	418	189	322	244	447	83.4%
Net Income	263	36	34	25	178	604.4%
Balance Sheet
Cash	38	46	60	66	119	81.2%
Short Term Debt	816	1,301	1,840	1,155	1,645	42.3%
Long Term Debt	156	42	82	2	19	1,131.7%
Cash flow
Capex	12	23	13	30	15	-48.2%
Ratios
Revenue growth	-38.4%	-35.0%	20.8%	-4.3%	89.8%
EBITDA growth	30.4%	-54.7%	70.3%	-24.3%	83.4%
EBITDA Margin	41.6%	29.0%	40.9%	32.3%	31.2%	-1.1%
Net Income Margin	26.3%	5.5%	4.4%	3.3%	12.4%	9.1%
CAPEX, % of revenue	1.2%	3.6%	1.6%	3.9%	1.1%	-2.9%
ROE	17.5%	2.3%	2.2%	1.6%	11.6%	10.0%
Net Debt/EBITDA	2.2x	6.9x	5.8x	4.5x	3.5x	-1.0x

Revenue and profitability

Lkp Finance's Revenue surged on 89.8% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.5 pp from 22.1% to 16.5% in FY2015.

Net Income marign increased on 9.1 pp from 3.3% to 12.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Lkp Finance had CAPEX/Revenue of 1.1%. CAPEX/Revenue decreased on 2.5 pp from 3.6% in FY2012 to 1.1% in FY2015. For the last three years the average CAPEX/Revenue was 2.2%.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 3.7x. Net Debt / EBITDA dropped on 1.0x from 4.5x to 3.5x in FY2015. Debt jumped on 43.8% in FY2015 while cash jumped on 81.2% in FY2015.

Appendix 1: Peers in Other Financial Services

Below you can find Lkp Finance benchmarking vs. other companies in Other Financial Services 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
Indiabulls Securities ($IBSEC)		-48.1%	0.1%	58.0%	31.6%
Intec Capital ($INTECCAP)			42.5%	34.2%
Capital First ($CAPF)	-77.8%	90.7%	9.9%	31.5%
Centrum Capital ($CENTRUM)	-70.3%	85.4%	-5.7%	23.1%
Crisil ($CRISIL)	28.4%	21.2%	13.6%	12.9%
Median (11 companies)	-46.2%	10.3%	8.1%	12.2%	40.3%
Lkp Finance ($LKPFIN)		-35.0%	20.8%	-4.3%	89.8%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Capital First ($CAPF)	67.6%	74.3%	68.2%	67.6%
Intec Capital ($INTECCAP)		78.8%	77.3%	66.7%
Indiabulls Securities ($IBSEC)	32.7%	16.2%	36.2%	60.8%	64.4%
Jm Financial ($JMFINANCIL)	56.3%	56.3%	61.9%	60.3%
Religare Enterprises ($RELIGARE)	19.1%	43.2%	57.6%	53.8%
Median (11 companies)	33.2%	36.4%	36.2%	43.8%	46.7%
Lkp Finance ($LKPFIN)	41.6%	29.0%	40.9%	32.3%	31.2%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Icra ($ICRA)	2.4%	2.0%	2.1%	13.2%
Jm Financial ($JMFINANCIL)	1.0%	0.9%	0.9%	11.2%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)	5.6%	5.7%	7.8%	3.7%
Indiabulls Securities ($IBSEC)	1.0%	8.1%	1.8%	1.8%	1.1%
Multi Commodity Exchange Of India ($MCX)	8.5%	3.8%	8.8%	1.7%
Median (10 companies)	2.9%	3.8%	1.6%	1.7%	1.1%
Lkp Finance ($LKPFIN)	1.2%	3.6%	1.6%	3.9%	1.1%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Crisil ($CRISIL)	60.1%	62.5%	53.7%	46.4%
Icra ($ICRA)	24.5%	20.7%	17.0%	20.9%
Multi Commodity Exchange Of India ($MCX)	21.9%	35.4%	27.2%	9.9%
Religare Enterprises ($RELIGARE)	-2.7%	2.0%	3.4%	2.7%
Iris Mediaworks ($IRISMEDIA)		-1.1%	-0.2%	-0.2%
Median (34 companies)	21.9%	5.4%	10.2%	9.9%
Lkp Finance ($LKPFIN)

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Capital First ($CAPF)	9.1x	7.5x	9.2x	9.1x
Religare Enterprises ($RELIGARE)	20.2x	9.2x	6.1x	7.0x
Iris Mediaworks ($IRISMEDIA)	0.6x		11.6x	6.1x
Jm Financial ($JMFINANCIL)	6.6x	6.4x	6.4x	4.8x
Intec Capital ($INTECCAP)		5.1x	4.9x	4.6x
Median (21 companies)	-0.0x	-0.1x	0.7x	0.0x	0.0x
Lkp Finance ($LKPFIN)	2.2x	6.9x	5.8x	4.5x	3.5x

Lkp Finance stock price chart

Lkp Finance financials

mln.	FY2010	FY2011	FY2012

Revenue	1,629	1,003	651.8
EBITDA	320.3	417.6	189.3
Net income	234.2	263.3	36.042
CAPEX	12.893	11.790	23.239
Debt	347.1	972.1	1,343
Cash	127.7	37.615	45.564

About Lkp Finance

LKP Finance Limited, through its subsidiaries, operates as a non banking finance company in India. It provides equity broking in cash and derivatives, Internet based trading, Demat services, and research services to mutual funds, financial institutions, foreign and domestic institutional investors, insurance companies, banks, and corporates. The company also offers various debt instruments, including fixed and floating rate debentures, bonds, CDs, CPs, PTCs, Gsecs, T-Bills, and oil/fertilizer/food bonds for banks, institutions, FIIs, mutual funds, insurance companies, primary dealers, corporates, PSUs, and PF trusts; wealth management services to retail, high networth individual, and corporate clients; life and non-life insurance products; and commodity trading in futures, including bullions, metals, energy, and agro commodities. In addition, it provides merchant banking, investment banking, and currency derivatives trading services. The company offers its services through a network of approximately 1,500 outlets in India. LKP Finance Limited was founded in 1948 and is headquartered in Mumbai, India.