Onward Technologies reports 40.4% EBITDA growth and 1.2 pp EBITDA Margin growth from 5.1% to 6.3%
13-05-2015 • About Onward Technologies (
$ONWARDTEC) • By InTwits
Onward Technologies reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company has business model with average profitability: ROIC is at 11.3%
- It operates with high leverage: Net Debt/EBITDA is 1.9x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Onward Technologies ($ONWARDTEC) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,032 | 1,305 | 1,460 | 1,670 | 1,893 | 13.4% |
| EBITDA | 104 | 126 | 150 | 86 | 120 | 40.4% |
| Net Income | 50 | 65 | 53 | 1 | 29 | 3,758.7% |
Balance Sheet
|
|---|
| Cash | 8 | 17 | 25 | 18 | 23 | 23.5% |
| Short Term Debt | 111 | 148 | 177 | 243 | 147 | -39.4% |
| Long Term Debt | 176 | 169 | 177 | 125 | 107 | -14.1% |
Cash flow
|
|---|
| Capex | 26 | 29 | 25 | | 62 | |
Ratios
|
|---|
| Revenue growth | -53.4% | 26.5% | 11.9% | 14.3% | 13.4% | |
| EBITDA growth | 191.1% | 21.5% | 19.0% | -42.9% | 40.4% | |
| EBITDA Margin | 10.0% | 9.6% | 10.3% | 5.1% | 6.3% | 1.2% |
| Net Income Margin | 4.8% | 5.0% | 3.7% | 0.0% | 1.5% | 1.5% |
| CAPEX, % of revenue | 2.5% | 2.2% | 1.7% | | 3.3% | 3.3% |
| ROIC | 16.0% | 18.8% | 20.7% | 8.3% | 11.3% | 3.0% |
| ROE | 66.6% | 46.1% | 25.8% | 0.3% | 10.0% | 9.7% |
| Net Debt/EBITDA | 2.7x | 2.4x | 2.2x | 4.1x | 1.9x | -2.2x |
Revenue and profitability
Onward Technologies's Revenue jumped on 13.4% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.6 pp from 66.7% to 65.1% in FY2015.
Net Income marign increased slightly on 1.5 pp from 0.045% to 1.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 3.3%. The company's CAPEX/Revenue increased slightly on 1.1 pp from 2.2% in FY2012 to 3.3% in FY2015.Onward Technologies invested a big chunk of EBITDA (51.6%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (11.26%) and ROE (10.01%). ROIC increased on 3.0 pp from 8.3% to 11.3% in FY2015. ROE increased on 9.7 pp from 0.30% to 10.0% in FY2015.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA dropped on 2.2x from 4.1x to 1.9x in FY2015. Debt dropped on 30.8% in FY2015 while cash jumped on 23.5% in FY2015.
Appendix 1: Peers in IT Consulting & Software
Below we provide Onward Technologies benchmarking against other companies in IT Consulting & Software 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 |
|---|
| Tech Mahindra ($TECHM) | -85.8% | 6.8% | 25.2% | 174.0% | |
| Tata Consultancy Services ($TCS) | | 31.0% | 28.8% | 29.9% | 15.7% |
| Mindtree ($MINDTREE) | | 26.6% | 23.2% | 28.8% | 17.0% |
| Infinite Computer Solutions (India) ($INFINITE) | -57.9% | 19.5% | 31.7% | 24.6% | |
| Infosys ($INFY) | | 22.7% | 19.6% | 24.2% | 6.4% |
| |
|---|
| Median (21 companies) | -26.2% | 22.7% | 20.6% | 14.0% | 10.6% |
|---|
| Onward Technologies ($ONWARDTEC) | | 26.5% | 11.9% | 14.3% | 13.4% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Consultancy Services ($TCS) | | | | 47.4% | 42.4% |
| Infosys ($INFY) | 45.3% | 41.3% | 98.1% | 35.9% | 38.3% |
| Mindtree ($MINDTREE) | 32.8% | 31.5% | 36.2% | | 34.8% |
| Wipro ($WIPRO) | 31.5% | 29.2% | 30.4% | 32.0% | 31.6% |
| |
|---|
| Median (4 companies) | 34.7% | 32.7% | 36.2% | 35.9% | 36.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oracle Financial Services Software ($OFSS) | 37.4% | 35.3% | 35.2% | 37.4% | |
| Tata Consultancy Services ($TCS) | 29.9% | 29.5% | 28.6% | 30.7% | 26.1% |
| Infosys ($INFY) | 32.5% | 31.6% | 27.9% | 26.3% | 27.1% |
| Wipro ($WIPRO) | 21.1% | 19.1% | 20.9% | 22.4% | 22.3% |
| Tech Mahindra ($TECHM) | 19.5% | 16.7% | 20.7% | 22.2% | |
| |
|---|
| Median (18 companies) | 18.0% | 15.1% | 17.8% | 18.5% | 17.3% |
|---|
| Onward Technologies ($ONWARDTEC) | 10.0% | 9.6% | 10.3% | 5.1% | 6.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ramco Systems ($RAMCOSYS) | 16.4% | | 22.1% | 15.3% | 12.4% |
| Niit Technologies ($NIITTECH) | 4.1% | 5.9% | 4.6% | 6.1% | 7.9% |
| Infosys ($INFY) | 4.7% | 4.9% | 5.2% | 5.5% | 4.2% |
| Mindtree ($MINDTREE) | 5.6% | 2.5% | 4.5% | 5.0% | 5.6% |
| Tech Mahindra ($TECHM) | 3.0% | 5.4% | 2.6% | 5.0% | |
| |
|---|
| Median (18 companies) | 4.2% | 3.9% | 3.5% | 3.0% | 3.1% |
|---|
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Consultancy Services ($TCS) | 47.1% | 48.6% | 48.4% | 50.2% | 40.5% |
| Tech Mahindra ($TECHM) | 19.2% | 15.4% | 20.1% | 43.0% | |
| Geometric ($GEOMETRIC) | 19.6% | 29.9% | 46.4% | 41.1% | 20.6% |
| Mindtree ($MINDTREE) | 14.9% | 24.9% | 34.6% | 36.2% | 32.0% |
| Cmc ($CMC) | 31.5% | 26.2% | 33.2% | 35.3% | 26.0% |
| |
|---|
| Median (30 companies) | 19.2% | 19.6% | 21.1% | 23.2% | 20.7% |
|---|
| Onward Technologies ($ONWARDTEC) | 16.0% | 18.8% | 20.7% | 8.3% | 11.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 3I Infotech ($3IINFOTECH) | 3.5x | 8.5x | 20.3x | 27.7x | |
| Ramco Systems ($RAMCOSYS) | 4.0x | 8.8x | | 27.6x | 4.2x |
| Starcom Information Technology ($STARCOM) | | | | 17.4x | |
| Kpit Technologies ($KPIT) | -0.7x | 0.3x | 0.5x | 0.7x | 0.4x |
| Tera Software ($TERASOFT) | 0.7x | 1.7x | 1.5x | 0.0x | |
| |
|---|
| Median (23 companies) | -0.2x | -0.1x | -0.2x | -0.3x | -0.7x |
|---|
| Onward Technologies ($ONWARDTEC) | 2.7x | 2.4x | 2.2x | 4.1x | 1.9x |
