Skipper Net Income jumped on 231% in 2015 and Revenue jumped on 26.0%

22-05-2015 • About Skipper ($SKIPPER) • By InTwits

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

• EBITDA Margin is expanding: 16.4% in FY2015 vs. 10.7% in FY2014 vs. 10.1% in FY2011
• Skipper has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.7%. At the same time it's a lot of higher than industry average of 4.6%.
• CAPEX is quite volatile: 568 in FY2015, 1,327 in FY2014, 2,750 in FY2013, 395 in FY2012, 260 in FY2011
• The company has highly profitable business model: ROIC is at 27.4%

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

Skipper ($SKIPPER) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	5,025	7,412	9,003	10,415	13,128	26.0%
EBITDA	506	631	867	1,115	2,156	93.3%
Net Income	176	99	187	269	892	231.4%
Balance Sheet
Cash	7	86	128	263	561	113.2%
Short Term Debt	2,134	1,222	1,990	2,088	2,122	1.6%
Long Term Debt	1,372	1,772	1,986	2,307	1,707	-26.0%
Cash flow
Capex	681	564	591	327	329	0.6%
Ratios
Revenue growth	-67.5%	47.5%	21.5%	15.7%	26.0%
EBITDA growth	39.5%	24.6%	37.5%	28.7%	93.3%
EBITDA Margin	10.1%	8.5%	9.6%	10.7%	16.4%	5.7%
Net Income Margin	3.5%	1.3%	2.1%	2.6%	6.8%	4.2%
CAPEX, % of revenue	13.6%	7.6%	6.6%	3.1%	2.5%	-0.6%
ROIC	10.6%	10.4%	13.5%	14.7%	27.4%	12.7%
ROE	14.8%	5.8%	11.0%	12.3%	33.3%	21.0%
Net Debt/EBITDA	6.9x	4.6x	4.4x	3.7x	1.5x	-2.2x

Revenue and profitability

The company's Revenue jumped on 26.0% 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 on 4.2 pp from 2.6% to 6.8% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 2.5%. The company's CAPEX/Revenue decreased on 5.1 pp from 7.6% in FY2012 to 2.5% in FY2015. For the last three years the average CAPEX/Revenue was 4.1%.

Return on investment

The company operates at high and attractive ROIC (27.36%) and ROE (33.33%). ROIC surged on 12.7 pp from 14.7% to 27.4% in FY2015. ROE surged on 21.0 pp from 12.3% to 33.3% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.5x and Debt / EBITDA is 1.8x. Net Debt / EBITDA dropped on 2.2x from 3.7x to 1.5x in FY2015. Debt dropped on 12.9% in FY2015 while cash surged on 113% in FY2015.

Valuation

The company's trades at EV/EBITDA 9.3x and P/E 18.8x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 11.0x with the industry average at 4.7x.

Appendix 1: Peers in Construction & Engineering

Below you can find Skipper benchmarking vs. other companies in Construction & Engineering 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
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 ($ARSSINFRA)		-5.3%	-34.8%	17.8%	-27.8%
Median (31 companies)	-26.2%	8.7%	6.6%	6.6%	7.1%
Skipper ($SKIPPER)		47.5%	21.5%	15.7%	26.0%

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 ($ARSSINFRA)	21.8%	14.0%	13.9%	22.0%	31.3%
Median (29 companies)	12.4%	12.4%	11.3%	10.2%	11.3%
Skipper ($SKIPPER)	10.1%	8.5%	9.6%	10.7%	16.4%

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) ($JMCPROJECT)	7.8%	4.5%	1.7%	18.9%
Median (23 companies)	5.5%	7.4%	8.6%	6.6%	2.2%
Skipper ($SKIPPER)	13.6%	7.6%	6.6%	3.1%	2.5%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
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%
Unity Infraprojects ($UNITY)	15.4%	16.8%	15.0%	9.1%
Median (42 companies)	10.7%	8.6%	7.1%	5.6%	7.0%
Skipper ($SKIPPER)	10.6%	10.4%	13.5%	14.7%	27.4%

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
Punj Lloyd ($PUNJLLOYD)	6.5x	6.7x	6.8x	16.5x
Madhucon Projects ($MADHUCON)	40.1x	96.8x	19.0x	16.4x
Hindustan Construction Co ($HCC)	10.0x	18.8x	20.3x	12.3x	9.3x
Median (32 companies)	3.7x	4.6x	5.7x	6.6x	3.0x
Skipper ($SKIPPER)	6.9x	4.6x	4.4x	3.7x	1.5x

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