Icra reports 14.5% EBITDA growth and almost no change in EBITDA Margin of 31.1%

21-05-2015 • About Icra ($ICRA) • By InTwits

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

Icra has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's a lot of higher than industry average of 2.5%.
CAPEX is quite volatile: 47.5 in FY2015, 372 in FY2014, 53.2 in FY2013, 40.9 in FY2012, 47.2 in FY2011
The company has highly profitable business model: ROIC is at 21.1%

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

Icra ($ICRA) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	1,930	2,075	2,514	2,822	3,209	13.7%
EBITDA	741	755	647	870	996	14.5%
Net Income	481	540	592	689	654	-5.1%
Balance Sheet
Cash	243	227	456	265	1,180	346.3%
Short Term Debt	0	0	0	7	5	-19.7%
Long Term Debt	0	0	0	158	96	-39.3%
Cash flow
Capex	47	41	53	372	47	-87.3%
Ratios
Revenue growth	-49.4%	7.5%	21.2%	12.2%	13.7%
EBITDA growth	5.1%	1.9%	-14.3%	34.6%	14.5%
EBITDA Margin	38.4%	36.4%	25.7%	30.8%	31.1%	0.2%
Net Income Margin	24.9%	26.0%	23.5%	24.4%	20.4%	-4.0%
CAPEX, % of revenue	2.4%	2.0%	2.1%	13.2%	1.5%	-11.7%
ROIC	24.5%	20.7%	17.0%	20.9%	21.1%	0.2%
ROE	20.1%	19.3%	18.5%	19.0%	16.0%	-2.9%
Net Debt/EBITDA	-0.3x	-0.3x	-0.7x	-0.1x	-1.1x	-1.0x

Revenue and profitability

Icra's Revenue jumped on 13.7% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 16.0 pp from -6.3% to 9.7% in FY2015.

Net Income marign decreased on 4.0 pp from 24.4% to 20.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Icra had CAPEX/Revenue of 1.5%. The company's CAPEX/Revenue showed almost no change from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 5.6%.

Return on investment

The company operates at high and attractive ROIC (21.06%) while ROE is a bit lower (16.03%). ROIC showed almost no change in FY2015. ROE decreased on 2.9 pp from 19.0% to 16.0% in FY2015.

Leverage (Debt)

Debt level is -1.1x Net Debt / EBITDA and 0.1x Debt / EBITDA. Net Debt / EBITDA dropped on 1.0x from -0.1x to -1.1x in FY2015. Debt dropped on 38.5% in FY2015 while cash jumped on 346% in FY2015.

Management team

The company's CEO Naresh Takkar has spent 12 years at the company.

Appendix 1: Peers in Other Financial Services

Below you can find Icra benchmarking vs. other companies in Other Financial Services 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
Indiabulls Securities ($IBSEC)		-48.1%	0.1%	58.0%	31.6%
Intec Capital ($INTECCAP)			42.5%	34.2%
Capital First ($CAPF)		90.7%	9.9%	31.5%	35.8%
Centrum Capital ($CENTRUM)	-70.3%	85.4%	-5.7%	23.1%
Crisil ($CRISIL)	28.4%	21.2%	13.6%	12.9%
Median (11 companies)	-46.2%	5.3%	8.1%	-0.5%	39.1%
Icra ($ICRA)		7.5%	21.2%	12.2%	13.7%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Twentyfirst Century Management Services ($21STCENMGM)					91.9%
Capital First ($CAPF)	67.6%	74.3%	68.2%	67.6%	66.6%
Indiabulls Securities ($IBSEC)	32.7%	16.2%	36.2%	60.8%	64.4%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)	24.6%	25.7%	31.9%	33.3%	39.9%
Multi Commodity Exchange Of India ($MCX)	53.7%	65.8%	62.3%	43.8%	39.4%
Median (9 companies)	33.2%	33.5%	40.9%	43.8%	39.4%
Icra ($ICRA)	38.4%	36.4%	25.7%	30.8%	31.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jm Financial ($JMFINANCIL)	1.0%	0.9%	0.9%	11.2%
Lkp Finance ($LKPFIN)	1.2%	3.6%	1.6%	3.9%	1.1%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)	5.6%	5.7%	7.8%	3.7%	4.8%
Indiabulls Securities ($IBSEC)	1.0%	8.1%	1.8%	1.8%	1.1%
Multi Commodity Exchange Of India ($MCX)	8.5%	3.8%	8.8%	1.7%	3.8%
Median (10 companies)	2.5%	3.8%	1.6%	1.7%	1.1%
Icra ($ICRA)	2.4%	2.0%	2.1%	13.2%	1.5%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Crisil ($CRISIL)	60.1%	62.5%	53.7%	46.4%
Multi Commodity Exchange Of India ($MCX)	21.9%	35.4%	27.2%	9.9%	4.8%
Religare Enterprises ($RELIGARE)	-2.7%	2.0%	3.4%	2.7%
Iris Mediaworks ($IRISMEDIA)		-1.1%	-0.2%	-0.2%
Db (International) Stock Brokers ($DBSTOCKBRO)
Median (34 companies)	9.6%	3.7%	3.4%	6.3%	4.8%
Icra ($ICRA)	24.5%	20.7%	17.0%	20.9%	21.1%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Capital First ($CAPF)	9.1x	7.5x	9.2x	9.1x	7.7x
Religare Enterprises ($RELIGARE)	20.2x	9.2x	6.1x	7.0x
Iris Mediaworks ($IRISMEDIA)	0.6x		11.6x	6.1x
Jm Financial ($JMFINANCIL)	6.6x	6.4x	6.4x	4.8x
Intec Capital ($INTECCAP)		5.1x	4.9x	4.6x
Median (21 companies)	0.0x	0.0x	1.8x	0.0x	0.0x
Icra ($ICRA)	-0.3x	-0.3x	-0.7x	-0.1x	-1.1x

Icra stock price chart

Icra financials

mln.	FY2010	FY2011	FY2012

Revenue	3,814	1,930	2,075
EBITDA	704.9	740.6	754.6
Net income	534.8	481.1	540.1
CAPEX	65.530	47.248	40.877
Debt	0.000	0.000	0.000
Cash	108.7	242.9	226.6

About Icra

ICRA Limited operates as an independent and professional investment information and credit rating agency in India. The company provides rating services, including credit, bank loan, corporate governance, stakeholder value and governance, project finance, structured finance, mutual fund, and issuer rating services; rating of claims paying ability of insurance companies; and performance and credit rating of small-scale enterprises. It also offers grading services to initial public offers, microfinance institutions, construction entities, real estate developers and projects, education institutes, and maritime training institutes; industry research and equity research services; and consulting services comprising policy advisory, strategy, risk management, capacity building, process re-engineering, transaction advisory, policy and regulation, and development consulting services. In addition, the company provides information technology (IT) solutions, such as client-server, Web-centric, and mobile applications; software services in disaster response initiative; and customization/implementation services on Oracle e-business suite. Further, it offers business intelligence/analytics consisting of predictive modeling, data mining, and business intelligence and analytics solutions; and multidisciplinary computer aided engineering design and resourcing services. Additionally, it provides financial information products and services, which include mutual fund and ULIP data and content, investment research and analytics services, wealth and transaction management software products, IT tools for financial planning and analytics, and software services; and knowledge process outsourcing services in data services, accounting services, electronic conversion of financial statements, research, analytics, and structured finance areas. The company, formerly known as Investment Information and Credit Rating Agency of India Limited, was founded in 1991 and is based in Gurgaon, India.