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Arvind reports 26.5% CAPEX growth and 14.4% Revenue growth

14-05-2015 • About Arvind ($ARVIND) • By InTwits

Arvind reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • EBITDA Margin is relatively stable: 12.7% in FY2015 vs. 13.7% in FY2014 vs. 13.0% in FY2011
  • Arvind has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.1%. At the same time it's in pair with industry average of 9.4%.
  • CAPEX is quite volatile: 1,508 in FY2015, 1,894 in FY2014, 3,449 in FY2013, 9,768 in FY2012, 15,571 in FY2011
  • The company has highly profitable business model: ROIC is at 13.2%
  • It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Arvind ($ARVIND) key annual financial indicators

mln. INR201120122013201420152015/2014
Net Income1,6494,3592,4843,5393,411-3.6%
Balance Sheet
Short Term Debt10,94113,51214,55716,46520,02621.6%
Long Term Debt8,9457,77010,05113,45513,9413.6%
Cash flow
Revenue growth-56.5%20.6%7.5%29.7%14.4%
EBITDA growth29.1%14.5%15.9%33.4%6.1%
EBITDA Margin13.0%12.3%13.3%13.7%12.7%-1.0%
Net Income Margin4.0%8.8%4.7%5.2%4.3%-0.8%
SG&A, % of revenue2.0%2.0%
CAPEX, % of revenue5.5%9.4%7.0%6.5%7.2%0.7%
Net Debt/EBITDA3.7x3.4x3.3x3.0x3.3x0.3x

Revenue and profitability

Arvind's Revenue jumped on 14.4% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.99 pp from 13.7% to 12.7% in FY2015.

Net Income marign decreased slightly on 0.81 pp from 5.2% to 4.3% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 7.2%. CAPEX/Revenue decreased on 2.3 pp from 9.4% in FY2012 to 7.2% in FY2015. For the last three years the average CAPEX/Revenue was 6.9%.The company invested a big chunk of EBITDA (56.5%) to CAPEX to fuel its growth.

Return on investment

The company operates at good ROIC (13.22%) and ROE (12.86%). ROIC decreased slightly on 0.52 pp from 13.7% to 13.2% in FY2015. ROE decreased slightly on 1.8 pp from 14.6% to 12.9% in FY2015.

Leverage (Debt)

Debt level is 3.3x Net Debt / EBITDA and 3.4x Debt / EBITDA. Net Debt / EBITDA surged on 0.3x from 3.0x to 3.3x in FY2015. Debt jumped on 13.5% in FY2015 while cash dropped on 49.6% in FY2015.

Appendix 1: Peers in Textiles

Below you can find Arvind benchmarking vs. other companies in Textiles 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
Olympia Industries ($OLYMPTX)-99.6%-58.0%-96.6%74,809.1%
Gujarat Cotex ($GUJCOTEX)625.9%-6.2%-66.0%176.2%
T T ($TTL)-39.2%-21.8%28.7%47.8%
Filatex India ($FILATEX)-74.3%-2.7%158.7%44.5%
Gtn Textiles ($GTNTEX)-27.7%-8.8%51.2%39.4%
Median (73 companies)-29.2%4.8%10.0%14.2%3.5%
Arvind ($ARVIND)20.6%7.5%29.7%14.4%

Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Ruby Mills ($RUBYMILLS)25.2%28.3%25.1%28.6%
Vardhman Textiles ($VTL)24.9%13.8%20.1%24.3%16.5%
Welspun India ($WELSPUNIND)13.3%12.2%16.8%22.6%24.1%
Nitin Spinners ($NITINSPIN)23.7%10.5%19.7%19.3%17.0%
Shri Dinesh Mills ($SHRIDINE)24.7%22.4%18.5%18.7%
Median (53 companies)12.7%6.3%9.5%9.5%12.1%
Arvind ($ARVIND)13.0%12.3%13.3%13.7%12.7%

Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Jindal Worldwide ($JINDWORLD)3.6%3.0%10.5%20.7%
SRF ($SRF)0.0%0.0%18.7%20.0%11.4%
Welspun India ($WELSPUNIND)11.3%5.6%7.8%16.4%10.9%
Sel Manufacturing Company ($SELMCL)54.2%53.9%25.1%14.0%
Grasim Industries ($GRASIM)7.8%17.7%21.7%11.6%10.2%
Median (20 companies)4.5%3.0%5.3%7.4%9.5%
Arvind ($ARVIND)5.5%9.4%7.0%6.5%7.2%

Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Nitin Spinners ($NITINSPIN)13.8%6.0%19.5%21.5%17.5%
Sutlej Textiles & Industries ($SUTLEJTEX)16.0%9.5%13.6%19.8%14.6%
Vardhman Textiles ($VTL)15.5%6.6%11.9%17.3%8.5%
Maral Overseas ($MARALOVER)4.6%14.1%16.0%
Rswm ($RSWM)17.4%2.2%15.2%15.5%11.8%
Median (126 companies)10.1%3.5%9.0%8.9%10.8%
Arvind ($ARVIND)9.9%11.3%11.2%13.7%13.2%

Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Jaybharat Textiles & Real Estate ($JAYTEX)8.4x10.9x53.6x23.8x
Sree Jayalakshmi Autospin ($SREEJAYA)3.4x9.7x12.8x
Bombay Rayon Fashions ($BRFL)5.9x4.9x4.9x11.6x
Sel Manufacturing Company ($SELMCL)5.6x9.4x6.6x11.5x
Ruby Mills ($RUBYMILLS)15.9x12.6x15.3x10.8x
Median (69 companies)3.9x3.8x3.2x0.0x1.2x
Arvind ($ARVIND)3.7x3.4x3.3x3.0x3.3x