Kokuyo Camlin reports 401% EBITDA growth and 2.5 pp EBITDA Margin growth from 0.74% to 3.2%

14-05-2015 • About Kokuyo Camlin ($KOKUYOCMLN) • By InTwits

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

EBITDA Margin is quite volatile: 3.2% in FY2015, 0.7% in FY2014, -1.2% in FY2013, 3.3% in FY2012, 7.3% in FY2011
Kokuyo Camlin has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.4%. At the same time it's a lot of higher than industry average of 2.3%.
CAPEX is quite volatile: 188 in FY2015, 391 in FY2014, 142 in FY2013, 99.5 in FY2012, 154 in FY2011
The company has potentially unprofitable business model: ROIC is at 2.3%

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

Kokuyo Camlin ($KOKUYOCMLN) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	3,591	3,857	4,384	4,704	5,439	15.6%
EBITDA	263	125	-52	35	174	401.4%
Net Income	86	-1	-151	-78	50
Balance Sheet
Cash	14	147	56	570	739	29.7%
Short Term Debt	404	414	478	538	641	19.2%
Long Term Debt	31	2	174	131	88	-32.4%
Cash flow
Capex	154	99	142	391	188	-51.9%
Ratios
Revenue growth	-44.8%	7.4%	13.6%	7.3%	15.6%
EBITDA growth	-8.4%	-52.3%	-141.7%	-166.2%	401.4%
EBITDA Margin	7.3%	3.3%	-1.2%	0.7%	3.2%	2.5%
Net Income Margin	2.4%	-0.0%	-3.4%	-1.7%	0.9%	2.6%
CAPEX, % of revenue	4.3%	2.6%	3.2%	8.3%	3.5%	-4.9%
ROIC	17.6%	3.6%	-7.6%	-2.4%	2.3%	4.7%
ROE	13.0%	-0.1%	-12.4%	-4.8%	2.4%	7.2%
Net Debt/EBITDA	1.6x	2.1x		2.8x	-0.1x	-2.9x

Revenue and profitability

Kokuyo Camlin's Revenue jumped on 15.6% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.5 pp from 0.74% to 3.2% in FY2015.

Net Income marign increased on 2.6 pp from -1.7% to 0.92% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 3.5%. The company's CAPEX/Revenue increased slightly on 0.88 pp from 2.6% in FY2012 to 3.5% in FY2015. It's average CAPEX/Revenue for the last three years was 5.0%.Kokuyo Camlin has spent a lot to CAPEX (108% of EBITDA) to secure its growth.

Return on investment

The company operates at low ROIC (2.31%) and ROE (2.38%). ROIC increased on 4.7 pp from -2.4% to 2.3% in FY2015. ROE increased on 7.2 pp from -4.8% to 2.4% in FY2015.

Leverage (Debt)

Debt level is -0.1x Net Debt / EBITDA and 4.2x Debt / EBITDA. Net Debt / EBITDA dropped on 2.9x from 2.8x to -0.1x in FY2015. Debt increased on 9.1% in FY2015 while cash jumped on 29.7% in FY2015.

Valuation

The company's trades at EV/EBITDA 53.0x and P/E 183.3x while industy averages are 10.5x and 26.1x.

Appendix 1: Peers in Non-Durable Household Prod.

Below you can find Kokuyo Camlin benchmarking vs. other companies in Non-Durable Household Prod. 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	FY2011	FY2012	FY2013	FY2014	FY2015
Eveready Industries India ($EVEREADY)		2.4%	-5.9%	11.4%	10.9%
Panasonic Energy India Company ($PANAENERG)	-35.2%	5.5%	11.4%	8.9%
Linc Pen & Plastics ($LINCPENQ)	-33.6%	9.2%	10.6%	3.1%
Median (3 companies)	-34.4%	5.5%	10.6%	8.9%	10.9%
Kokuyo Camlin ($KOKUYOCMLN)		7.4%	13.6%	7.3%	15.6%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Eveready Industries India ($EVEREADY)	6.5%	4.0%	6.3%	7.9%	9.7%
Linc Pen & Plastics ($LINCPENQ)	5.9%	3.8%	5.6%	7.5%
Panasonic Energy India Company ($PANAENERG)	4.8%	3.4%	3.4%	6.3%
Median (3 companies)	5.9%	3.8%	5.6%	7.5%	9.7%
Kokuyo Camlin ($KOKUYOCMLN)	7.3%	3.3%	-1.2%	0.7%	3.2%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Linc Pen & Plastics ($LINCPENQ)	4.7%	2.4%	2.2%	3.0%
Eveready Industries India ($EVEREADY)	1.7%	2.7%	1.3%	1.7%	2.6%
Panasonic Energy India Company ($PANAENERG)	0.4%	0.4%	0.8%	0.1%
Median (3 companies)	1.7%	2.4%	1.3%	1.7%	2.6%
Kokuyo Camlin ($KOKUYOCMLN)	4.3%	2.6%	3.2%	8.3%	3.5%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Linc Pen & Plastics ($LINCPENQ)	14.1%	6.6%	12.5%	16.6%
Eveready Industries India ($EVEREADY)	3.5%	1.6%	3.5%	5.7%	10.8%
High Energy Batteries (India) ($HIGHENE)	-0.9%	11.6%	10.0%	-10.2%
Panasonic Energy India Company ($PANAENERG)	7.6%
Todays Writing Instruments ($TODAYS)	-12.0%	-111.5%	-39.0%
Median (5 companies)	3.5%	4.1%	6.8%	5.7%	10.8%
Kokuyo Camlin ($KOKUYOCMLN)	17.6%	3.6%	-7.6%	-2.4%	2.3%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Eveready Industries India ($EVEREADY)	5.4x	8.2x	4.1x	2.5x	1.8x
Linc Pen & Plastics ($LINCPENQ)	2.8x	4.1x	1.9x	1.4x
Todays Writing Instruments ($TODAYS)				0.0x
Panasonic Energy India Company ($PANAENERG)	-1.7x	-3.3x	-2.4x	-1.6x
Median (4 companies)	4.1x	4.0x	3.0x	0.7x	1.8x
Kokuyo Camlin ($KOKUYOCMLN)	1.6x	2.1x		2.8x	-0.1x

Kokuyo Camlin stock price chart

Kokuyo Camlin financials

mln.	FY2010	FY2011	FY2012

Revenue	6,502	3,591	3,857
EBITDA	286.9	262.7	125.4
Net income	116.4	85.713	-0.961
CAPEX	155.0	153.9	99.480
Debt	424.9	435.6	416.2
Cash	21.085	14.031	147.2

About Kokuyo Camlin

Kokuyo Camlin Limited manufactures and markets school and education products, fine art and hobby materials, and office stationery in India. It provides parents and students products, including adhesives, color pencils, correction products, drawing books, fountain pens and ink, geometry boxes and accessories, mechanical pencils and leads, modeling clays, notebooks, oil pastels, pencils and pals, pens, plastic crayons, sketch pens, student poster colors, students water color cakes, students water color tubes, technical instruments, and wax crayons. The company also offers artists and designers products, including art materials, artist's pastels, artist's water colors, artists acrylic colors, artists acrylic colors, brushes, canvases, drawing inks, others art materials, painting mediums, premium poster colors, students' oil colors, and water color pencils. In addition, it provides products for office professionals, such as gums and pastes, highlighters, permanent markers, CD/DVD markers, paint makers, stamp pads and rubber stamp pad inks, and carbon papers; and tools and materials for hobbies comprising 3D glitters, glass colors, cone liners, hobby brushes, hobby mediums, and sparkle colors. The company markets its products under the Camel and Camlin brands. Kokuyo Camlin Limited also exports its products primarily to CIS and SAARC countries, the Middle East, and Far East countries. The company was formerly known as Camlin Limited and changed its name to Kokuyo Camlin Limited in 2012. The company was founded in 1931 and is based in Mumbai, India. Kokuyo Camlin Limited is a subsidiary of Kokuyo S&T Co., Ltd.