Sterlite Technologies reports 67.4% EBITDA growth and 4.2 pp EBITDA Margin growth from 10.8% to 15.0%
18-05-2015 • About Sterlite Technologies (
$STRTECH) • By InTwits
Sterlite Technologies reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sterlite Technologies has high CAPEX intensity: 5 year average CAPEX/Revenue was 38.9%. At the same time it's a lot of higher than industry average of 9.6%.
- CAPEX is quite volatile: 11,592 in FY2015, 16,636 in FY2014, 14,589 in FY2013, 6,534 in FY2012, 4,487 in FY2011
- The company has potentially unprofitable business model: ROIC is at 4.5%
- It operates with high leverage: Net Debt/EBITDA is 11.1x while industry average is 8.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sterlite Technologies ($STRTECH) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 22,621 | 26,218 | 30,923 | 25,639 | 30,971 | 20.8% |
| SG&A | 1,246 | | | | | |
| EBITDA | 2,679 | 1,963 | 2,309 | 2,767 | 4,633 | 67.4% |
| Net Income | 1,412 | 396 | 252 | -355 | -26 | |
Balance Sheet
|
|---|
| Cash | 179 | 1,348 | 4,675 | 830 | 1,538 | 85.4% |
| Short Term Debt | 6,506 | 6,645 | 9,092 | 8,527 | 8,804 | 3.2% |
| Long Term Debt | 1,171 | 3,720 | 19,116 | 34,856 | 44,359 | 27.3% |
Cash flow
|
|---|
| Capex | 4,487 | 6,534 | 14,589 | 16,636 | 11,592 | -30.3% |
Ratios
|
|---|
| Revenue growth | -38.1% | 15.9% | 17.9% | -17.1% | 20.8% | |
| EBITDA growth | -32.5% | -26.7% | 17.6% | 19.9% | 67.4% | |
| EBITDA Margin | 11.8% | 7.5% | 7.5% | 10.8% | 15.0% | 4.2% |
| Net Income Margin | 6.2% | 1.5% | 0.8% | -1.4% | -0.1% | 1.3% |
| SG&A, % of revenue | 5.5% | | | | | 0.0% |
| CAPEX, % of revenue | 19.8% | 24.9% | 47.2% | 64.9% | 37.4% | -27.5% |
| ROIC | 12.9% | 6.0% | 4.3% | 3.0% | 4.5% | 1.5% |
| ROE | 14.5% | 3.6% | 2.2% | -3.1% | -0.2% | 2.9% |
| Net Debt/EBITDA | 2.8x | 4.6x | 10.2x | 15.4x | 11.1x | -4.2x |
Revenue and profitability
The company's Revenue jumped on 20.8% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.3 pp from 14.2% to 23.5% in FY2015.
Net Income marign increased slightly on 1.3 pp from -1.4% to -0.085% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 37.4%. Sterlite Technologies showed fast CAPEX/Revenue growth of 12.5 pp from 24.9% in FY2012 to 37.4% in FY2015. For the last three years the average CAPEX/Revenue was 49.8%.The company has spent a lot to CAPEX (250% of EBITDA) to fuel its growth.
Return on investment
The company operates at low but positive ROIC (4.48%) and negative ROE (-0.20%). ROIC increased slightly on 1.5 pp from 3.0% to 4.5% in FY2015. ROE increased on 2.9 pp from -3.1% to -0.20% in FY2015.
Leverage (Debt)
Debt level is 11.1x Net Debt / EBITDA and 11.5x Debt / EBITDA. Net Debt / EBITDA dropped on 4.2x from 15.4x to 11.1x in FY2015. Debt surged on 22.5% in FY2015 while cash surged on 85.4% in FY2015.
Appendix 1: Peers in Heavy Electrical Equipment
Below we provide Sterlite Technologies benchmarking against other companies in Heavy Electrical Equipment 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 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ujaas Energy ($UJAAS) | -71.9% | 1.1% | 614.7% | 116.7% | |
| Transformers And Rectifiers (India) ($TRIL) | -20.6% | -4.4% | -1.3% | 42.8% | |
| Jyoti Structures ($JYOTISTRUC) | -35.2% | 15.3% | 8.9% | 20.7% | |
| Emco ($EMCO) | -4.5% | -19.1% | -13.0% | 20.2% | |
| Crompton Greaves ($CROMPGREAV) | 9.5% | 12.4% | 7.5% | 12.7% | |
| |
|---|
| Median (15 companies) | -12.4% | 13.6% | -9.8% | 1.7% | -18.5% |
|---|
| Sterlite Technologies ($STRTECH) | | 15.9% | 17.9% | -17.1% | 20.8% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Suzlon Energy ($SUZLON) | 30.3% | 33.2% | 27.2% | 28.6% | |
| |
|---|
| Median (1 company) | 30.3% | 33.2% | 27.2% | 28.6% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Techno Electric And Engineering Co. ($TECHNO) | 23.3% | 27.0% | 34.5% | 28.5% | |
| Techno Electric & Engineering Company ($TECHELE) | 23.3% | 27.0% | 34.5% | 28.5% | |
| Ujaas Energy ($UJAAS) | 9.3% | 1.2% | 18.7% | 17.4% | |
| Bgr Energy Systems ($BGRENERGY) | 12.4% | 14.1% | 14.6% | 12.2% | |
| Bharat Heavy Electricals ($BHEL) | 20.6% | 21.0% | 19.7% | 11.8% | |
| |
|---|
| Median (15 companies) | 12.5% | 9.4% | 8.8% | 6.6% | 8.3% |
|---|
| Sterlite Technologies ($STRTECH) | 11.8% | 7.5% | 7.5% | 10.8% | 15.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Swelect Energy Systems ($SWELECTES) | 2.9% | 5.1% | 42.5% | 50.8% | |
| Ujaas Energy ($UJAAS) | 6.8% | 87.8% | 1.4% | 20.2% | |
| T D Power Systems ($TDPOWERSYS) | 1.5% | 3.7% | 14.5% | 15.1% | |
| Bharat Heavy Electricals ($BHEL) | 5.2% | 3.3% | 3.6% | 4.1% | |
| Suzlon Energy ($SUZLON) | 4.6% | 4.2% | 3.7% | 3.4% | |
| |
|---|
| Median (14 companies) | 5.2% | 5.1% | 3.0% | 2.3% | 2.5% |
|---|
| Sterlite Technologies ($STRTECH) | 19.8% | 24.9% | 47.2% | 64.9% | 37.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ujaas Energy ($UJAAS) | 10.6% | 0.0% | 28.5% | 33.7% | |
| Alstom India ($AIL) | 44.3% | 27.2% | 25.6% | 13.2% | 10.7% |
| Bharat Heavy Electricals ($BHEL) | 46.1% | 41.5% | 29.5% | 10.3% | |
| Crompton Greaves ($CROMPGREAV) | 32.5% | 12.9% | 3.5% | 10.1% | |
| Bgr Energy Systems ($BGRENERGY) | 25.9% | 15.5% | 11.9% | 9.7% | |
| |
|---|
| Median (17 companies) | 19.5% | 15.3% | 7.1% | 9.3% | 10.7% |
|---|
| Sterlite Technologies ($STRTECH) | 12.9% | 6.0% | 4.3% | 3.0% | 4.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Suzlon Energy ($SUZLON) | 9.7x | 6.1x | | 87.6x | |
| Jyoti Structures ($JYOTISTRUC) | 1.3x | 2.4x | 3.6x | 5.7x | |
| Emco ($EMCO) | | 8.1x | 7.3x | 5.7x | |
| Swelect Energy Systems ($SWELECTES) | 0.5x | 0.5x | 1.3x | 5.0x | |
| Transformers And Rectifiers (India) ($TRIL) | 0.8x | -0.9x | 4.2x | 4.1x | |
| |
|---|
| Median (15 companies) | 1.0x | 1.5x | 2.6x | 2.5x | -4.1x |
|---|
| Sterlite Technologies ($STRTECH) | 2.8x | 4.6x | 10.2x | 15.4x | 11.1x |
