Gujarat State Fertilizers & Chemicals reports 19.7% Net Income growth while 1.6% Revenue decline

14-05-2015 • About Gujarat State Fertilizers & Chemicals ($GSFC) • By InTwits

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

EBITDA Margin is quite volatile: 12.3% in FY2015, 12.1% in FY2014, 13.6% in FY2013, 22.4% in FY2012, 25.4% in FY2011
Gujarat State Fertilizers & Chemicals has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.5%. At the same time it's a lot of higher than industry average of 1.9%.
CAPEX is quite volatile: 1,391 in FY2015, 3,019 in FY2014, 4,150 in FY2013, 4,059 in FY2012, 4,681 in FY2011
The company has business model with average profitability: ROIC is at 10.2%

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

Gujarat State Fertilizers & Chemicals ($GSFC) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	47,551	53,018	62,533	54,125	53,246	-1.6%
EBITDA	12,061	11,879	8,496	6,549	6,566	0.3%
Net Income	7,494	7,576	5,181	3,422	4,095	19.7%
Balance Sheet
Cash	6,109	8,953	1,605	3,833	3,548	-7.4%
Short Term Debt	3,923	6,170	12,658	5,646	5,524	-2.2%
Long Term Debt	0	0	2,393	2,244	1,919	-14.5%
Cash flow
Capex	4,681	4,059	4,150	3,019	1,391	-53.9%
Ratios
Revenue growth	-23.1%	11.5%	17.9%	-13.4%	-1.6%
EBITDA growth	155.2%	-1.5%	-28.5%	-22.9%	0.3%
EBITDA Margin	25.4%	22.4%	13.6%	12.1%	12.3%	0.2%
Net Income Margin	15.8%	14.3%	8.3%	6.3%	7.7%	1.4%
CAPEX, % of revenue	9.8%	7.7%	6.6%	5.6%	2.6%	-3.0%
ROIC	32.9%	27.1%	14.2%	9.2%	10.2%	1.0%
ROE	30.1%	23.9%	13.9%	8.4%	9.4%	1.0%
Net Debt/EBITDA	-0.2x	-0.2x	1.6x	0.6x	0.6x	-0.0x

Revenue and profitability

Gujarat State Fertilizers & Chemicals's Revenue decreased slightly on 1.6% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.2 pp from 28.9% to 33.1% in FY2015.

Net Income marign increased slightly on 1.4 pp from 6.3% to 7.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 2.6%. The company showed decline in CAPEX/Revenue of 5.0 pp from 7.7% in FY2012 to 2.6% in FY2015. It's average CAPEX/Revenue for the last three years was 4.9%.

Return on investment

The company operates at low ROIC (10.23%) and ROE (9.42%). ROIC increased slightly on 0.98 pp from 9.2% to 10.2% in FY2015. ROE increased slightly on 1.0 pp from 8.4% to 9.4% in FY2015.

Leverage (Debt)

Debt level is 0.6x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA decreased on 0.026x from 0.6x to 0.6x in FY2015. Debt decreased on 5.7% in FY2015 while cash decreased on 7.4% in FY2015.

Valuation

Gujarat State Fertilizers & Chemicals's trades at EV/EBITDA 5.3x and P/E 7.5x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 6.7x with the industry average at 4.7x.

Appendix 1: Peers in Fertilizers

Below you can find Gujarat State Fertilizers & Chemicals benchmarking vs. other companies in Fertilizers 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
Coromandel International ($COROMANDEL)		199.6%	-38.7%	18.8%	13.4%
Chambal Fertilisers & Chemicals ($CHAMBLFERT)		32.6%	8.8%	8.6%	9.3%
Basant Agro Tech (India) ($BASANTGL)	-53.8%	63.9%	5.3%	7.7%
Rama Phosphates ($RAMAPHO)	-25.6%	56.4%	11.4%	-13.9%
Khaitan Chemicals & Fertilizers ($KHAICHEM)	13.7%	41.2%	-29.1%	-14.7%
Median (5 companies)	-25.6%	56.4%	5.3%	7.7%	11.3%
Gujarat State Fertilizers & Chemicals ($GSFC)		11.5%	17.9%	-13.4%	-1.6%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Coromandel International ($COROMANDEL)	34.1%	10.8%	16.3%	14.0%	12.8%
Chambal Fertilisers & Chemicals ($CHAMBLFERT)	15.0%	13.2%	10.7%	10.6%	8.2%
Khaitan Chemicals & Fertilizers ($KHAICHEM)	15.7%	11.0%	6.8%	9.2%
Basant Agro Tech (India) ($BASANTGL)	9.5%	8.7%	9.4%	8.6%
Rama Phosphates ($RAMAPHO)	12.8%	11.2%	7.7%	0.2%
Median (5 companies)	15.0%	11.0%	9.4%	9.2%	10.5%
Gujarat State Fertilizers & Chemicals ($GSFC)	25.4%	22.4%	13.6%	12.1%	12.3%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Chambal Fertilisers & Chemicals ($CHAMBLFERT)	1.9%	1.6%	1.2%	1.7%	2.0%
Coromandel International ($COROMANDEL)	5.9%		4.4%	1.6%	1.2%
Median (2 companies)	3.9%	1.7%	4.3%	1.6%	1.6%
Gujarat State Fertilizers & Chemicals ($GSFC)	9.8%	7.7%	6.6%	5.6%	2.6%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Coromandel International ($COROMANDEL)	28.9%	22.2%	16.7%	18.3%	20.5%
Chambal Fertilisers & Chemicals ($CHAMBLFERT)	12.0%	13.6%	9.3%	9.2%	8.6%
Khaitan Chemicals & Fertilizers ($KHAICHEM)	25.7%	20.1%	5.9%	7.3%
Kothari Industrial Corporation ($KOTIC)			-5.5%
Teesta Agro Industries ($TEEAI)	1.7%
Median (7 companies)	12.8%	20.1%	11.1%	9.2%	14.5%
Gujarat State Fertilizers & Chemicals ($GSFC)	32.9%	27.1%	14.2%	9.2%	10.2%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Khaitan Chemicals & Fertilizers ($KHAICHEM)	2.1x	2.4x	9.0x	5.3x
Chambal Fertilisers & Chemicals ($CHAMBLFERT)	2.5x	3.3x	5.4x	4.5x	4.5x
Coromandel International ($COROMANDEL)	1.1x	1.8x	2.8x	1.4x	2.0x
Basant Agro Tech (India) ($BASANTGL)	3.9x	3.9x	3.8x	0.0x
Rama Phosphates ($RAMAPHO)	1.0x	0.8x	1.2x	0.0x
Median (5 companies)	1.6x	2.4x	3.8x	1.4x	3.2x
Gujarat State Fertilizers & Chemicals ($GSFC)	-0.2x	-0.2x	1.6x	0.6x	0.6x

Gujarat State Fertilizers & Chemicals stock price chart

Gujarat State Fertilizers & Chemicals financials

mln.	FY2010	FY2011	FY2012

Revenue	61,803	47,551	53,018
EBITDA	4,725	12,061	11,879
Net income	2,545	7,494	7,576
CAPEX	1,533	4,681	4,059
Debt	6,876	3,923	6,170
Cash	589.9	6,109	8,953

About Gujarat State Fertilizers & Chemicals

Gujarat State Fertilizers & Chemicals Limited provides industrial, fertilizer, and agricultural products in India. It operates in two segments, Fertilizer Products and Industrial Products. The company offers industrial products, such as anhydrous ammonia, argon gas, caprolactam, melamine, methanol methyl ethyl ketoxime, nylon-6 chips, oleum, sulphuric acid, acetone cyanohydrine, anone-anol mixtures, cyclohexane, cyclohexanone, hydroxylamine sulphate, methacrylic acid, methyl methacrylate, nitric acid, nylon-6 filament yarn, and polymethyl methacrylate pellets and sheets. It also provides fertilizer products, including a range of fertilizers consisting of urea, ammonium sulphate, di-ammonium phosphate, ammonium phosphate sulphate, NPK, water soluble fertilizers, micro mixes, and gypsum. In addition, the company offers agro products comprising Sardar Amin granules and liquid for soil application and liquid by foliar spray; bio-fertilizers consisting of azotobacter, azospirillum, and phosphate solubilizing bacteria; Sardar NIRMAL, a low nutrient fertilizer; plant tissue culture, a technology for rapid multiply the elite types in vegetative propagated plants; and seeds. Further, it is involved in the trading of pesticides, zinc sulphate, muriate of potash, single super phosphate, and magnesium sulphate. Gujarat State Fertilizers & Chemicals Limited was founded in 1962 and is based in Vadodara, India.