Essar Ports reports 1,454% CAPEX growth while 22.1% Revenue decline
14-05-2015 • About Essar Ports (
$ESSARPORTS) • By InTwits
Essar Ports reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Essar Ports is a company in decline: FY2015 revenue growth was -22.1%, 5 years revenue CAGR was -3.7%
- Essar Ports has high CAPEX intensity: 5 year average CAPEX/Revenue was 37.1%. At the same time it's a lot of higher than industry average of 23.9%.
- CAPEX is quite volatile: 2,847 in FY2015, 183 in FY2014, 4,860 in FY2013, 7,354 in FY2012, 12,829 in FY2011
- The company has business model with average profitability: ROIC is at 11.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.8x while industry average is 4.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Essar Ports ($ESSARPORTS) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 19,107 | 11,088 | 14,215 | 21,244 | 16,541 | -22.1% |
| EBITDA | 7,537 | 8,986 | 11,413 | 12,393 | 13,028 | 5.1% |
| Net Income | 702 | 640 | 3,315 | 3,837 | 3,912 | 1.9% |
Balance Sheet
|
|---|
| Cash | 846 | 162 | 113 | 83 | 1,170 | 1,309.8% |
| Short Term Debt | 2,370 | 5,411 | 7,244 | 4,824 | 8,179 | 69.5% |
| Long Term Debt | 42,391 | 49,640 | 50,305 | 54,821 | 55,854 | 1.9% |
Cash flow
|
|---|
| Capex | 12,829 | 7,354 | 4,860 | 183 | 2,847 | 1,453.9% |
Ratios
|
|---|
| Revenue growth | -4.1% | -42.0% | 28.2% | 49.4% | -22.1% | |
| EBITDA growth | -28.1% | 19.2% | 27.0% | 8.6% | 5.1% | |
| EBITDA Margin | 39.4% | 81.0% | 80.3% | 58.3% | 78.8% | 20.4% |
| Net Income Margin | 3.7% | 5.8% | 23.3% | 18.1% | 23.7% | 5.6% |
| CAPEX, % of revenue | 67.1% | 66.3% | 34.2% | 0.9% | 17.2% | 16.3% |
| ROIC | 3.8% | 9.3% | 10.9% | 10.9% | 11.1% | 0.2% |
| ROE | 1.3% | 2.9% | 13.5% | 13.2% | 12.0% | -1.2% |
| Net Debt/EBITDA | 5.8x | 6.1x | 5.0x | 4.8x | 4.8x | 0.0x |
Revenue and profitability
Essar Ports's Revenue dropped on 22.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 20.4 pp from 58.3% to 78.8% in FY2015.
Net Income marign increased on 5.6 pp from 18.1% to 23.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Essar Ports had CAPEX/Revenue of 17.2%. CAPEX/Revenue dropped on 49.1 pp from 66.3% in FY2012 to 17.2% in FY2015. For the last three years the average CAPEX/Revenue was 17.4%.
Return on investment
The company operates at good ROE (12.03%) while ROIC is low (11.11%). ROIC showed almost no change in FY2015. ROE decreased slightly on 1.2 pp from 13.2% to 12.0% in FY2015.
Leverage (Debt)
Debt level is 4.8x Net Debt / EBITDA and 4.9x Debt / EBITDA. Net Debt / EBITDA increased slightly on 0.019x from 4.8x to 4.8x in FY2015. Debt increased on 7.4% in FY2015 while cash surged on 1,310% in FY2015.
Valuation
Essar Ports's trades at EV/EBITDA 8.4x and P/E 11.9x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 10.8x with the industry average at 4.7x.
Management team
The company's CEO is Rajiv Agarwal. Rajiv Agarwal has 7 years tenure at the company.
Appendix 1: Peers in Marine Port & Services
Below we provide Essar Ports benchmarking against other companies in Marine Port & Services 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | | 36.1% | 32.3% | 31.4% | 28.6% |
| |
|---|
| Median (1 company) | | 36.1% | 32.3% | 31.4% | 28.6% |
|---|
| Essar Ports ($ESSARPORTS) | | -42.0% | 28.2% | 49.4% | -22.1% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 67.1% | 68.0% | 68.4% | 65.0% | 67.4% |
| |
|---|
| Median (1 company) | 67.1% | 68.0% | 68.4% | 65.0% | 67.4% |
|---|
| Essar Ports ($ESSARPORTS) | 39.4% | 81.0% | 80.3% | 58.3% | 78.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 96.1% | 173.0% | 110.0% | 27.2% | 30.6% |
| |
|---|
| Median (1 company) | 96.1% | 173.0% | 110.0% | 27.2% | 30.6% |
|---|
| Essar Ports ($ESSARPORTS) | 67.1% | 66.3% | 34.2% | 0.9% | 17.2% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 13.7% | 9.7% | 9.7% | 11.7% | 12.1% |
| |
|---|
| Median (1 company) | 13.7% | 9.7% | 9.7% | 11.7% | 12.1% |
|---|
| Essar Ports ($ESSARPORTS) | 3.8% | 9.3% | 10.9% | 10.9% | 11.1% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 2.7x | 9.6x | 4.5x | 4.3x | 4.3x |
| |
|---|
| Median (1 company) | 2.7x | 9.6x | 4.5x | 4.3x | 4.3x |
|---|
| Essar Ports ($ESSARPORTS) | 5.8x | 6.1x | 5.0x | 4.8x | 4.8x |
