Jai Corp Net Income dropped on 47.4% in 2015 and EBITDA Margin decreased on 3.3 pp from 16.0% to 12.7%

11-05-2015 • About Jai Corp ($JAICORPLTD) • By InTwits

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

• Jai Corp is a company in decline: FY2015 revenue growth was -5.6%, 5 years revenue CAGR was -3.0%
• Jai Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.0%. At the same time it's a lot of higher than industry average of 4.7%.
• CAPEX is quite volatile: 853 in FY2015, 277 in FY2014, 195 in FY2013, 395 in FY2012, 314 in FY2011
• The company has potentially unprofitable business model: ROIC is at 2.8%

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

Jai Corp ($JAICORPLTD) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	5,441	6,825	6,954	7,480	7,060	-5.6%
EBITDA	1,001	966	1,132	1,194	896	-25.0%
Net Income	1,276	1,374	1,066	997	525	-47.4%
Balance Sheet
Cash	263	86	46	278	163	-41.3%
Short Term Debt	331	283	242	195	42	-78.2%
Long Term Debt	240	211	206	218	224	3.0%
Cash flow
Capex	163	271	183	182	216	18.4%
Ratios
Revenue growth	-33.9%	25.4%	1.9%	7.6%	-5.6%
EBITDA growth	15.2%	-3.5%	17.2%	5.5%	-25.0%
EBITDA Margin	18.4%	14.1%	16.3%	16.0%	12.7%	-3.3%
Net Income Margin	23.4%	20.1%	15.3%	13.3%	7.4%	-5.9%
CAPEX, % of revenue	3.0%	4.0%	2.6%	2.4%	3.1%	0.6%
ROIC	2.9%	3.0%	4.0%	4.3%	2.8%	-1.5%
ROE	4.6%	5.3%	4.6%	4.4%	2.3%	-2.1%
Net Debt/EBITDA	0.3x	0.4x	0.4x	0.1x	0.1x	0.0x

Revenue and profitability

Jai Corp's Revenue decreased on 5.6% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.3 pp from 16.0% to 12.7% in FY2015.

Net Income marign decreased on 5.9 pp from 13.3% to 7.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Jai Corp had CAPEX/Revenue of 3.1%. The company showed small CAPEX/Revenue decline of 0.92 pp from 4.0% in FY2012 to 3.1% in FY2015. It's average CAPEX/Revenue for the last three years was 2.7%.

Return on investment

The company operates at low ROIC (2.82%) and ROE (2.29%). ROIC decreased slightly on 1.5 pp from 4.3% to 2.8% in FY2015. ROE decreased on 2.1 pp from 4.4% to 2.3% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 0.1x and Debt / EBITDA is 0.3x. Net Debt / EBITDA showed almost no change in FY2015. Debt dropped on 35.4% in FY2015 while cash dropped on 41.3% in FY2015.

Management team

Jai Corp's CEO is Gaurav Jain. Gaurav Jain has 10 years tenure at the company. Pramod Kumar Jaiswal is a The company's CFO. Pramod Kumar Jaiswal has spent 6 years at the company.

Appendix 1: Peers in Iron & Steel/Interm.Products

Below we provide Jai Corp benchmarking against other companies in Iron & Steel/Interm.Products 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
Inducto Steel ($INDCTST)			54.5%	150.2%
Kamdhenu Ispat ($KIL)	-65.5%	25.7%	13.7%	68.3%
Metkore Alloys & Industries ($METKORE)	-49.1%	43.7%	-10.9%	53.4%
Tata Metaliks ($TATAMETALI)		-7.0%	-19.0%	44.6%	-1.3%
Visa Steel ($VISASTEEL)	-12.5%	3.3%	-24.1%	42.0%
Median (31 companies)	-35.9%	11.9%	8.8%	2.8%	4.8%
Jai Corp ($JAICORPLTD)		25.4%	1.9%	7.6%	-5.6%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jindal Steel & Power ($JINDALSTEL)	48.3%	37.5%	30.5%	28.1%
Bhushan Steel ($BHUSANSTL)	29.0%	31.2%	32.3%	28.1%
Sarda Energy & Minerals ($SARDAEN)	15.2%	16.3%	21.5%	21.3%
Jsw Steel ($JSWSTEEL)	20.2%	17.8%	17.1%	17.9%
Prakash Industries ($PRAKASH)	20.7%	17.8%	13.0%	14.5%
Median (28 companies)	13.0%	9.4%	9.0%	7.0%	10.9%
Jai Corp ($JAICORPLTD)	18.4%	14.1%	16.3%	16.0%	12.7%

Top companies by CAPEX/Revenue, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jindal Steel & Power ($JINDALSTEL)	64.7%	34.2%	47.6%	69.6%
Bhushan Steel ($BHUSANSTL)	81.1%	47.2%	44.0%	50.4%
Jayaswal Neco Industries ($JAYNECOIND)	27.9%	20.4%	44.0%	31.1%
Surana Industries ($SURANAIND)		41.3%	54.8%	21.5%
Steel Authority Of India ($SAIL)	25.3%	20.9%	20.7%	19.3%
Median (20 companies)	12.3%	9.7%	11.6%	7.7%	3.8%
Jai Corp ($JAICORPLTD)	3.0%	4.0%	2.6%	2.4%	3.1%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tata Metaliks ($TATAMETALI)	3.1%	-23.5%	-3.7%	19.9%	57.4%
Nova Iron & Steel ($NOVIS)				15.4%
Kirloskar Ferrous Industries ($KIRLFER)	20.0%	19.1%	16.8%	12.4%	14.7%
Pennar Industries ($PENIND)	31.6%	26.8%	18.4%	12.3%
Jsw Steel ($JSWSTEEL)	9.7%	11.0%	10.3%	12.1%
Median (40 companies)	9.6%	7.2%	5.7%	6.0%	36.1%
Jai Corp ($JAICORPLTD)	2.9%	3.0%	4.0%	4.3%	2.8%

Top companies by Net Debt / EBITDA

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jai Balaji Industries ($JAIBALAJI)	5.5x			89.7x
Visa Steel ($VISASTEEL)	6.9x	20.1x		24.4x
Ismt ($ISMTLTD)	4.4x	5.3x	9.8x	19.9x
Kic Metaliks ($KAJARIR)	6.6x	9.2x	3.0x	18.2x
Bhushan Steel ($BHUSANSTL)	8.1x	6.3x	8.6x	12.9x
Median (29 companies)	3.8x	4.6x	4.4x	3.4x	0.8x
Jai Corp ($JAICORPLTD)	0.3x	0.4x	0.4x	0.1x	0.1x

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