Thirumalai Chemicals reports 53.5% EBITDA decline and 2.9 pp EBITDA Margin decline from 6.4% to 3.6%

06-05-2015 • About Thirumalai Chemicals ($TIRUMALCHM) • By InTwits

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

Thirumalai Chemicals is a company in decline: FY2015 revenue growth was -16.0%, 5 years revenue CAGR was -2.6%
EBITDA Margin is quite volatile: 3.6% in FY2015, 6.4% in FY2014, 9.9% in FY2013, 7.0% in FY2012, 8.9% in FY2011
The company has potentially unprofitable business model: ROIC is at 5.3%
It operates with high leverage: Net Debt/EBITDA is 3.6x while industry average is 2.1x

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

Thirumalai Chemicals ($TIRUMALCHM) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	7,586	10,540	13,715	12,689	10,654	-16.0%
EBITDA	676	736	1,362	818	381	-53.5%
Net Income	179	9	438	119	-137	-215.7%
Balance Sheet
Cash	14	123	58	214	48	-77.5%
Short Term Debt	1,503	1,341	2,027	1,350	1,028	-23.9%
Long Term Debt	326	1,425	1,074	595	388	-34.8%
Cash flow
Capex	1,499	365	134		214
Ratios
Revenue growth	-37.5%	38.9%	30.1%	-7.5%	-16.0%
EBITDA growth		8.9%	85.1%	-40.0%	-53.5%
EBITDA Margin	8.9%	7.0%	9.9%	6.4%	3.6%	-2.9%
Net Income Margin	2.4%	0.1%	3.2%	0.9%	-1.3%	-2.2%
CAPEX, % of revenue	19.8%	3.5%	1.0%		2.0%	2.0%
ROIC		13.0%	23.2%	12.5%	5.3%	-7.2%
ROE		0.7%	24.8%	5.7%	-6.7%	-12.5%
Net Debt/EBITDA	2.7x	3.6x	2.2x	2.1x	3.6x	1.5x

Revenue and profitability

The company's Revenue dropped on 16.0% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.7 pp from 0.46% to 4.1% in FY2015.

Net Income marign decreased on 2.2 pp from 0.93% to -1.3% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 2.0% in FY2015. Thirumalai Chemicals showed small CAPEX/Revenue decline of 1.4 pp from 3.5% in FY2012 to 2.0% in FY2015.Battling declining revenue Thirumalai Chemicals invested a large share of EBITDA (56.3%) to CAPEX but that didn't help at least in this year.

Return on investment

The company operates at low but positive ROIC (5.28%) and negative ROE (-6.72%). ROIC decreased on 7.2 pp from 12.5% to 5.3% in FY2015. ROE dropped on 12.5 pp from 5.7% to -6.7% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is 3.7x. Net Debt / EBITDA jumped on 1.5x from 2.1x to 3.6x in FY2015. Debt dropped on 27.2% in FY2015 while cash dropped on 77.5% in FY2015.

Management team

Thirumalai Chemicals's CEO C G Sethuram has spent 5 years at the company.

Appendix 1: Peers in Commodity Chemicals

Below you can find Thirumalai Chemicals benchmarking vs. other companies in Commodity Chemicals 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
Shree Hari Chemicals Export ($SHHARICH)	-52.2%	-2.5%	-78.0%	299.5%
Jindal Poly Films ($JINDPOLBBPH)	-66.5%	-17.2%	-6.3%	131.7%
Bodal Chemicals ($BODALCHEM)	-51.3%	5.4%	-12.6%	80.0%
Kanoria Chemicals & Industries ($KANORICHEM)	-22.3%	-40.7%	27.2%	47.9%
Camphor & Allied Products ($CAMPHOR)	-49.0%	-6.7%	7.2%	42.7%
Median (35 companies)	-44.6%	15.5%	10.9%	10.7%	-2.0%
Thirumalai Chemicals ($TIRUMALCHM)		38.9%	30.1%	-7.5%	-16.0%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Shree Hari Chemicals Export ($SHHARICH)	8.3%	1.8%	-19.4%	29.4%
Chemfab Alkalis ($CHEMFALKAL)	19.0%	22.3%	32.9%	24.2%	19.8%
Aditya Birla Chemicals (India) ($ABCIL)	33.6%	26.8%	27.1%	23.6%
Bodal Chemicals ($BODALCHEM)	10.6%	1.8%	5.6%	20.4%
Alkyl Amines Chemicals ($ALKYLAMINE)	13.3%	15.9%	16.0%	19.0%
Median (31 companies)	13.3%	11.6%	8.3%	8.6%	19.8%
Thirumalai Chemicals ($TIRUMALCHM)	8.9%	7.0%	9.9%	6.4%	3.6%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Chemfab Alkalis ($CHEMFALKAL)	5.1%	2.2%	15.8%	55.6%
Aditya Birla Chemicals (India) ($ABCIL)	5.9%	136.9%	24.2%	30.8%
Jindal Poly Films ($JINDPOLBBPH)	2.9%	6.9%	2.1%	27.5%
Polyplex Corporation ($POLYPLEX)	6.0%	10.7%	41.3%	19.2%
Kanoria Chemicals & Industries ($KANORICHEM)	12.9%	25.1%	6.0%	13.4%
Median (20 companies)	5.6%	5.3%	7.2%	5.7%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Riddhi Siddhi Gluco Biols ($RIDDHI)	-0.2%	-1.3%	-0.6%	61.1%
Bodal Chemicals ($BODALCHEM)		-1.3%	3.3%	39.0%
Elantas Beck India ($ELANTAS)	17.5%	20.4%	33.9%	31.0%
Alkyl Amines Chemicals ($ALKYLAMINE)	10.3%	16.0%	18.7%	25.0%
Aarti Industries ($AARTIIND)	13.1%	15.9%	19.1%	17.2%
Median (59 companies)	10.6%	9.0%	9.5%	8.9%
Thirumalai Chemicals ($TIRUMALCHM)		13.0%	23.2%	12.5%	5.3%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
India Glycols ($INDIAGLYCO)	8.2x	4.8x	3.7x	8.5x
Godrej Industries ($GODREJIND)	6.8x	9.9x	5.7x	7.9x
Polyplex Corporation ($POLYPLEX)	0.6x	0.9x	6.8x	7.1x
Link Pharma Chem ($LINKPH)	71.1x	3.4x	4.1x	6.2x
Refnol Resins & Chemicals ($REFNOL)			4.1x	5.6x
Median (41 companies)	2.4x	2.6x	3.2x	0.8x	0.0x
Thirumalai Chemicals ($TIRUMALCHM)	2.7x	3.6x	2.2x	2.1x	3.6x

Thirumalai Chemicals stock price chart

Thirumalai Chemicals financials

mln.	FY2010	FY2011	FY2012

Revenue	12,147	7,586	10,540
EBITDA	0.000	675.6	736.0
Net income	0.000	179.4	9.182
CAPEX	0.000	1,499	364.8
Debt	0.000	1,829	2,766
Cash	0.000	13.606	122.9

About Thirumalai Chemicals

Thirumalai Chemicals Limited manufactures and sells industrial and specialty chemicals, and its intermediaries. The company operates through Chemicals and Power Generation segments. It offers phthalic anhydride, maleic anhydride, malic acid, fumaric acid, L(+) tartaric acid, diethyl phthalate, and various fine chemicals and derivatives, as well as specialty chemicals, including succinic acid, succinic anhydride, and maleic acid. The company is also involved in power generation from wind operated generators. It serves paper, polymer additives, powder coating, rubber chemicals, agrochemicals, leather chemicals, plasticizers, food, pharma intermediates, beverage and confectioneries, unsaturated polyester, bakery goods, resins, feed, esters, construction materials, paints, metal cleaning, textile and leather, electroplating, detergent, water treatment, bulk drugs, intermediates, personal care and cosmetics, flavors and fragrances, adhesives, and pigments and dyes industries. The company markets its products directly, and through a network of agents and distributors in India, Europe, North America, South America, the Middle East, Southeast Asia, Far East, and Australia. Thirumalai Chemicals Limited was incorporated in 1972 and is based in Mumbai, India.