Punj Lloyd reports 222% EBITDA decline and 10.4 pp EBITDA Margin decline from 3.6% to -6.8%

22-05-2015 • About Punj Lloyd ($PUNJLLOYD) • By InTwits

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

Punj Lloyd is a company in decline: FY2015 revenue growth was -34.5%, 5 years revenue CAGR was -3.4%
EBITDA Margin is quite volatile: -6.8% in FY2015, 3.6% in FY2014, 7.8% in FY2013, 6.8% in FY2012, 6.6% in FY2011
Punj Lloyd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's a lot of higher than industry average of 5.7%.
CAPEX is quite volatile: 2,165 in FY2015, 3,866 in FY2014, 7,457 in FY2013, 9,089 in FY2012, 3,580 in FY2011
The company has unprofitable business model: ROIC is at -10.9%

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

Punj Lloyd ($PUNJLLOYD) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	78,951	103,129	112,484	108,263	70,903	-34.5%
EBITDA	5,206	7,031	8,730	3,918	-4,789	-222.2%
Net Income	-595	919	-72	-5,482	-11,411
Balance Sheet
Cash	11,365	8,799	7,548	3,771	3,327	-11.8%
Short Term Debt	24,067	35,259	48,285	45,205	53,160	17.6%
Long Term Debt	21,358	20,769	18,937	23,414	18,248	-22.1%
Cash flow
Capex	3,580	9,089	7,457	3,866	2,165	-44.0%
Ratios
Revenue growth	-6.5%	30.6%	9.1%	-3.8%	-34.5%
EBITDA growth	26.9%	35.1%	24.2%	-55.1%	-222.2%
EBITDA Margin	6.6%	6.8%	7.8%	3.6%	-6.8%	-10.4%
Net Income Margin	-0.8%	0.9%	-0.1%	-5.1%	-16.1%	-11.0%
CAPEX, % of revenue	4.5%	8.8%	6.6%	3.6%	3.1%	-0.5%
ROIC	3.2%	4.8%	5.5%	-0.0%	-10.9%	-10.9%
ROE	-2.0%	3.1%	-0.3%	-21.6%	-71.4%	-49.7%
Net Debt/EBITDA	6.5x	6.7x	6.8x	16.5x		-16.5x

Revenue and profitability

The company's Revenue dropped on 34.5% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from -1.3% to 6.1% in FY2015.

Net Income marign dropped on 11.0 pp from -5.1% to -16.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Punj Lloyd's CAPEX/Revenue was 3.1% in FY2015. CAPEX/Revenue decreased on 5.8 pp from 8.8% in FY2012 to 3.1% in FY2015. For the last three years the average CAPEX/Revenue was 4.4%.

Return on investment

The company operates at negative ROIC (-10.87%) and ROE (-71.36%). ROIC dropped on 10.9 pp from -0.0067% to -10.9% in FY2015. ROE dropped on 49.7 pp from -21.6% to -71.4% in FY2015.

Leverage (Debt)

Debt level is 2.7x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 16.5x from 16.5x to in FY2015. Debt increased on 4.1% in FY2015 while cash dropped on 11.8% in FY2015.

Appendix 1: Peers in Construction & Engineering

Below we provide Punj Lloyd benchmarking against other companies in Construction & Engineering 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
Madhucon Projects ($MADHUCON)	-72.3%	-19.5%	61.7%	81.2%
C & C Constructions ($CANDC)	7.1%	-11.6%	-12.2%	31.7%
Mbl Infrastructures ($MBLINFRA)	-58.2%	26.3%	7.1%	30.3%
Atlanta ($ATLANTA)	-61.5%	-47.6%	115.1%	28.1%
Arss Infrastructure Projects ($ARSSINFRA)		-5.3%	-34.8%	17.8%	-27.8%
Median (31 companies)	-26.2%	8.7%	6.6%	7.1%	7.6%
Punj Lloyd ($PUNJLLOYD)		30.6%	9.1%	-3.8%	-34.5%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaiprakash Associates ($JPASSOCIAT)	44.0%	36.9%	35.9%	32.4%
Atlanta ($ATLANTA)	44.1%	28.5%	34.6%	30.8%
Shristi Infrastructure Development Corporation ($SHRISTI)	28.0%	27.2%	30.0%	30.0%
Madhucon Projects ($MADHUCON)	11.6%	8.4%	31.9%	22.1%
Arss Infrastructure Projects ($ARSSINFRA)	21.8%	14.0%	13.9%	22.0%	31.3%
Median (29 companies)	12.4%	12.4%	11.3%	10.7%	12.4%
Punj Lloyd ($PUNJLLOYD)	6.6%	6.8%	7.8%	3.6%	-6.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Madhucon Projects ($MADHUCON)	149.8%	234.5%	155.1%	76.0%
Jaiprakash Associates ($JPASSOCIAT)	114.7%	97.0%	65.5%	45.0%
Supreme Infrastructure India ($SUPREMEINF)	16.7%	46.6%	31.1%	43.1%
Man Infraconstruction ($MANINFRA)	11.5%	7.8%	1.6%	25.0%
Jmc Projects (India) ($JMCPROJECT)	7.8%	4.5%	1.7%	18.9%
Median (23 companies)	6.1%	7.3%	8.6%	6.6%	1.9%
Punj Lloyd ($PUNJLLOYD)	4.5%	8.8%	6.6%	3.6%	3.1%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Skipper ($SKIPPER)	10.6%	10.4%	13.5%	14.7%	27.4%
Mbl Infrastructures ($MBLINFRA)	24.3%	21.3%	13.4%	14.0%
Voltas ($VOLTAS)	32.9%	19.6%	11.7%	11.8%	19.3%
Supreme Infrastructure India ($SUPREMEINF)	15.0%	15.4%	12.4%	10.6%
Reliance Industrial Infrastructure ($RIIL)	5.1%	10.8%	12.7%	10.5%	5.7%
Median (42 companies)	10.7%	8.6%	7.5%	6.3%	8.8%
Punj Lloyd ($PUNJLLOYD)	3.2%	4.8%	5.5%	-0.0%	-10.9%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Coromandel Engineering Company ($COROENGG)	7.1x		14.4x	54.6x	3.2x
Welspun Projects ($WELPROJ)	71.3x	6.0x	2.6x	20.8x
Madhucon Projects ($MADHUCON)	40.1x	96.8x	19.0x	16.4x
Hindustan Construction Co ($HCC)	10.0x	18.8x	20.3x	12.3x	9.3x
Jaiprakash Associates ($JPASSOCIAT)	7.6x	9.2x	8.9x	11.0x
Median (32 companies)	3.7x	4.5x	5.3x	5.9x	2.3x
Punj Lloyd ($PUNJLLOYD)	6.5x	6.7x	6.8x	16.5x

Punj Lloyd stock price chart

Punj Lloyd financials

mln.	FY2010	FY2011	FY2012

Revenue	84,473	78,951	103,129
EBITDA	4,102	5,206	7,031
Net income	-1,084.050	-595.200	918.6
CAPEX	3,161	3,580	9,089
Debt	44,566	45,425	56,028
Cash	5,935	11,365	8,799

About Punj Lloyd

Punj Lloyd Limited provides design; engineering, procurement, and construction (EPC); and project management services for the energy, infrastructure, and defense sectors. The company offers engineering, procurement, fabrication, and installation services for offshore wellhead and process platforms, including topsides and jackets, risers, submarine pipelines, underwater cables, and single buoy mooring systems; gathering stations, flow and transfer lines, and gas and crude processing plants; onshore rigs; onshore and offshore oil and gas pipelines; cryogenic, LNG, LPG, ethylene, ammonia, and other storage tanks; refineries; and petrochemical plants for polymer treatment, handling, conveying, storage, packing, and shipping, as well as is engaged in various polymerization processes. It also provides EPC services for civil construction and balance of thermal power plant packages; develops design for coal and ash handling, HVAC, water systems, fire fighting systems, and electrical and C&I packages; design and construction support services for nuclear process facilities in the areas, such as enrichment, fuel fabrication, new build, and decommissioning. In addition, the company offers water treatment and distribution solutions, as well as processes municipal solid and biomass waste; and provides design and EPC services for buildings, airports and seaports, national highways, and medical institutes. Further, it manufactures defense equipment comprising guns, rockets, missile artillery systems and related equipment, electro optical systems, fire control systems, ICT and power packs, anti tank/anti material weapons, and small arms, as well as armoured fighting vehicles, other armoured combat vehicles, and unmanned ground vehicles comprising associated systems, such as turrets, turret mounts, and armaments. The company primarily operates in the Middle East, North Africa, South East Asia, and India. Punj Lloyd Limited was founded in 1988 and is headquartered in Gurgaon, India.