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Meghmani Organics EBITDA surged on 22.0% in 2015 and EBITDA Margin increased slightly on 1.6 pp from 14.3% to 15.9%

22-05-2015 • About Meghmani Organics ($MEGH) • By InTwits

Meghmani Organics reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Meghmani Organics has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.6%. At the same time it's a lot of higher than industry average of 4.8%.
  • CAPEX is quite volatile: 0 in FY2015, 402 in FY2014, 865 in FY2013, 25.6 in FY2012, 131 in FY2011
  • The company has business model with low profitability: ROIC is at 9.5%
  • It operates with medium-size leverage: Net Debt/EBITDA is 3.1x while industry average is 3.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Meghmani Organics ($MEGH) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue10,45110,62210,58511,78312,9429.8%
EBITDA1,4641,6921,9311,6842,05422.0%
Net Income3803517222843992.5%
Balance Sheet
Cash16444099371156-58.0%
Short Term Debt2,5052,6342,9553,7713,307-12.3%
Long Term Debt4,6404,9934,2173,7733,129-17.1%
Cash flow
Capex1,0341,0881,086927600-35.3%
Ratios
Revenue growth-30.6%1.6%-0.4%11.3%9.8%
EBITDA growth17.8%15.6%14.1%-12.8%22.0%
EBITDA Margin14.0%15.9%18.2%14.3%15.9%1.6%
Net Income Margin3.6%0.3%1.6%1.9%3.4%1.5%
CAPEX, % of revenue9.9%10.2%10.3%7.9%4.6%-3.2%
ROIC6.4%7.3%8.9%6.5%9.5%3.1%
ROE7.9%0.7%3.5%4.5%8.2%3.7%
Net Debt/EBITDA4.8x4.2x3.7x4.3x3.1x-1.2x

Revenue and profitability


The company's Revenue increased on 9.8% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.9 pp from 6.8% to 14.6% in FY2015.

Net Income marign increased slightly on 1.5 pp from 1.9% to 3.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments


Meghmani Organics's CAPEX/Revenue was 4.6% in FY2015. The company showed decline in CAPEX/Revenue of 5.6 pp from 10.2% in FY2012 to 4.6% in FY2015. For the last three years the average CAPEX/Revenue was 7.6%.

Return on investment


The company operates at low ROIC (9.53%) and ROE (8.21%). ROIC increased on 3.1 pp from 6.5% to 9.5% in FY2015. ROE increased on 3.7 pp from 4.5% to 8.2% in FY2015.

Leverage (Debt)


Company's Net Debt / EBITDA is 3.1x and Debt / EBITDA is 3.1x. Net Debt / EBITDA dropped on 1.2x from 4.3x to 3.1x in FY2015. Debt dropped on 14.7% in FY2015 while cash dropped on 58.0% in FY2015.

Valuation


Meghmani Organics's trades at EV/EBITDA 5.3x and P/E 10.6x while industy averages are 10.5x and 26.1x. Meghmani Organics's EV/(EBITDA-CAPEX) is 7.5x with the industry average at 4.7x.

Appendix 1: Peers in Specialty Chemicals


Below you can find Meghmani Organics benchmarking vs. other companies in Specialty Chemicals 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
Dai-Ichi Karkaria ($DAICHI)20.7%31.4%45.4%22.8%
Dynemic Products ($DYNPRO)-55.8%27.4%-0.0%40.6%
Camlin Fine Sciences ($CAMLINFIN)95.3%11.4%36.1%9.8%
Sudarshan Chemical Industries ($SUDARSCHEM)-49.4%10.5%9.1%28.2%
Vinati Organics ($VINATIORGA)38.7%23.6%25.9%10.9%
 
Median (27 companies)-49.8%20.9%14.1%13.7%10.9%
Meghmani Organics ($MEGH)1.6%-0.4%11.3%9.8%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Vinati Organics ($VINATIORGA)21.7%21.7%21.8%22.7%24.9%
Adi Finechem ($ADIFINCHM)18.2%15.1%14.0%22.1%16.5%
Solar Industries India ($SOLARINDS)18.1%18.5%17.5%17.9%
Ultramarine & Pigments ($ULTRAMAR)20.1%18.0%15.5%17.4%
Anil ($ANILLTD)17.4%18.1%16.9%17.1%
 
Median (25 companies)11.2%10.6%11.2%10.6%13.8%
Meghmani Organics ($MEGH)14.0%15.9%18.2%14.3%15.9%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Adi Finechem ($ADIFINCHM)8.2%7.3%4.8%12.6%16.9%
Solar Industries India ($SOLARINDS)14.2%13.0%9.9%12.3%
Nitta Gelatin India ($NITTAGELA)21.3%8.8%4.6%8.5%
Camlin Fine Sciences ($CAMLINFIN)7.5%4.3%5.7%7.1%5.1%
Kiri Industries ($KIRIINDUS)5.3%5.4%4.5%5.6%
 
Median (18 companies)7.0%4.9%4.5%4.3%5.1%
Meghmani Organics ($MEGH)9.9%10.2%10.3%7.9%4.6%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Adi Finechem ($ADIFINCHM)27.6%30.6%29.8%46.4%26.3%
Vinati Organics ($VINATIORGA)31.4%29.6%26.2%30.6%34.8%
Pidilite Industries ($PIDILITIND)29.3%27.4%29.3%29.8%29.0%
Camlin Fine Sciences ($CAMLINFIN)9.9%11.1%17.8%24.2%29.5%
Plastiblends India ($PLASTIBLEN)19.4%18.3%15.8%24.0%
 
Median (35 companies)15.5%15.3%15.0%12.3%27.7%
Meghmani Organics ($MEGH)6.4%7.3%8.9%6.5%9.5%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Cochin Minerals & Rutile ($COCHINM)0.7x-0.0x-0.0x32.3x
Alkali Metals ($ALKALI)4.3x5.1x11.6x0.0x
Kiri Industries ($KIRIINDUS)3.9x8.2x31.3x10.6x
Vikas Globalone ($VIKASGLOB)0.0x2.5x4.4x4.9x
Jayant Agro-Organics ($JAYAGROGN)3.9x2.8x3.1x4.6x6.5x
 
Median (28 companies)1.3x1.4x1.5x1.7x0.1x
Meghmani Organics ($MEGH)4.8x4.2x3.7x4.3x3.1x


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