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Morepen Laboratories revenue increased on 9.2% in 2015 while EBITDA Margin decreased slightly on 1.3 pp from 13.3% to 12.0%

15-05-2015 • About Morepen Laboratories ($MOREPENLAB) • By InTwits

Morepen Laboratories reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • EBITDA Margin is quite volatile: 12.0% in FY2015, 13.3% in FY2014, 9.5% in FY2013, 6.9% in FY2012, 2.6% in FY2011
  • Morepen Laboratories has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 8.3%.
  • CAPEX is quite volatile: 379 in FY2015, 150 in FY2014, 102 in FY2013, 773 in FY2012, 976 in FY2011
  • The company has potentially unprofitable business model: ROIC is at 2.5%
  • It operates with medium-size leverage: Net Debt/EBITDA is 1.6x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Morepen Laboratories ($MOREPENLAB) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue2,2272,8023,2593,6694,0069.2%
EBITDA58192310489482-1.3%
Net Income-469-237-205-2821
Balance Sheet
Cash1537475756-1.2%
Short Term Debt427016614518628.4%
Long Term Debt1,2871,139947748623-16.7%
Cash flow
Capex36324845487.1%
Ratios
Revenue growth-53.7%25.8%16.3%12.6%9.2%
EBITDA growth-50.7%233.4%60.9%57.9%-1.3%
EBITDA Margin2.6%6.9%9.5%13.3%12.0%-1.3%
Net Income Margin-21.1%-8.4%-6.3%-0.8%0.5%1.3%
CAPEX, % of revenue1.6%1.1%1.5%1.2%1.2%-0.0%
ROIC-8.9%-6.3%-3.5%0.8%2.5%1.8%
ROE-18.9%-11.1%-10.8%-1.5%1.2%2.8%
Net Debt/EBITDA22.8x6.1x3.4x1.7x1.6x-0.1x

Revenue and profitability


Morepen Laboratories's Revenue increased on 9.2% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 17.3 pp from -19.1% to -1.8% in FY2015.

Net Income marign increased slightly on 1.3 pp from -0.76% to 0.53% in FY2015.

Capital expenditures (CAPEX) and working capital investments


In FY2015 Morepen Laboratories had CAPEX/Revenue of 1.2%. CAPEX/Revenue showed almost no change from FY2012 to FY2015. Average CAPEX/Revenue for the last three years was 1.3%.

Return on investment


The company operates at low ROIC (2.54%) and ROE (1.24%). ROIC increased slightly on 1.8 pp from 0.77% to 2.5% in FY2015. ROE increased on 2.8 pp from -1.5% to 1.2% in FY2015.

Leverage (Debt)


Company's Net Debt / EBITDA is 1.6x and Debt / EBITDA is 1.7x. Net Debt / EBITDA dropped on 0.1x from 1.7x to 1.6x in FY2015. Debt decreased on 9.4% in FY2015 while cash decreased slightly on 1.2% in FY2015.

Valuation


The company's trades at EV/EBITDA 11.5x and P/E 223.7x while industy averages are 10.5x and 26.1x. Morepen Laboratories's EV/(EBITDA-CAPEX) is 12.8x with the industry average at 4.7x.

Appendix 1: Peers in Pharmaceuticals


Below you can find Morepen Laboratories benchmarking vs. other companies in Pharmaceuticals 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
Granules India ($GRANULES)37.6%16.9%43.4%18.1%
Marksans Pharma ($MARKSANS)-66.6%16.7%23.3%43.3%
Sun Pharmaceutical Industries ($SUNPHARMA)-87.8%39.9%40.4%42.4%
Torrent Pharmaceuticals ($TORNTPHARM)22.7%17.7%32.2%13.6%
Abbott India ($ABBOTINDIA)-46.4%8.2%8.7%27.3%
 
Median (41 companies)-45.0%16.6%14.7%13.7%8.6%
Morepen Laboratories ($MOREPENLAB)25.8%16.3%12.6%9.2%


Top companies by Gross margin, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Dr.Reddy'S Laboratories ($DRREDDY)52.1%57.4%57.6%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Sun Pharmaceutical Industries ($SUNPHARMA)34.3%40.8%44.3%44.9%
Divi'S Laboratories ($DIVISLAB)38.1%37.2%38.2%40.2%
Venus Remedies ($VENUSREM)24.9%25.2%25.6%25.5%
Dr.Reddy'S Laboratories ($DRREDDY)21.7%25.8%22.9%25.1%23.2%
Natco Pharma ($NATCOPHARM)21.3%21.5%23.2%24.9%
 
Median (36 companies)16.5%12.9%13.4%15.0%16.2%
Morepen Laboratories ($MOREPENLAB)2.6%6.9%9.5%13.3%12.0%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Granules India ($GRANULES)5.3%8.8%15.2%24.3%11.4%
Dishman Pharmaceuticals & Chemicals ($DISHMAN)24.3%8.4%10.9%21.6%
Venus Remedies ($VENUSREM)26.6%23.2%22.2%17.5%
Shasun Pharmaceuticals ($SHASUNPHAR)4.3%10.4%15.2%15.8%11.3%
Natco Pharma ($NATCOPHARM)20.0%24.4%16.3%14.4%
 
Median (28 companies)7.4%8.2%8.3%5.8%6.4%
Morepen Laboratories ($MOREPENLAB)1.6%1.1%1.5%1.2%1.2%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%
Sun Pharmaceutical Industries ($SUNPHARMA)18.9%24.8%31.1%35.0%
Marksans Pharma ($MARKSANS)-25.8%-142.4%34.9%33.8%
Torrent Pharmaceuticals ($TORNTPHARM)22.3%26.4%30.5%33.2%19.7%
Jenburkt Pharmaceuticals ($JENBURPH)43.6%34.1%29.0%32.4%
 
Median (63 companies)14.0%14.0%13.8%15.6%16.1%
Morepen Laboratories ($MOREPENLAB)-8.9%-6.3%-3.5%0.8%2.5%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Ind-Swift Laboratories ($INDSWFTLAB)4.6x5.5x16.1x19.5x
Shasun Pharmaceuticals ($SHASUNPHAR)4.5x2.8x4.5x6.0x6.2x
Sharon Bio-Medicine ($SHARONBIO)4.6x4.7x5.3x4.5x
Jubilant Life Sciences Limited ($JUBILANT)5.3x4.0x3.5x3.5x6.4x
Kopran ($KOPRAN)6.0x4.5x3.0x3.0x
 
Median (50 companies)1.5x1.4x1.2x0.3x2.1x
Morepen Laboratories ($MOREPENLAB)22.8x6.1x3.4x1.7x1.6x