Bombay Rayon Fashions reports 34.5% EBITDA growth and 1.6 pp EBITDA Margin growth from 13.1% to 14.7%

23-05-2015 • About Bombay Rayon Fashions ($BRFL) • By InTwits

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

• Bombay Rayon Fashions has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.9%. At the same time it's a lot of higher than industry average of 9.1%.
• CAPEX is quite volatile: 83.6 in FY2015, 439 in FY2014, 3,538 in FY2013, 4,658 in FY2012, 13,788 in FY2011
• The company has potentially unprofitable business model: ROIC is at 4.7%
• It operates with high leverage: Net Debt/EBITDA is 10.0x while industry average is 1.5x

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

Bombay Rayon Fashions ($BRFL) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	26,909	29,021	33,020	29,946	35,814	19.6%
EBITDA	5,222	6,935	7,890	3,922	5,275	34.5%
Net Income	2,028	1,669	1,294	-4,834	-1,323
Balance Sheet
Cash	423	1,214	898	1,031	889	-13.8%
Short Term Debt	18,134	21,930	24,757	18,789	26,185	39.4%
Long Term Debt	13,110	13,076	14,934	27,909	27,417	-1.8%
Cash flow
Capex	13,788	4,658	3,538	439	84	-81.0%
Ratios
Revenue growth	-37.9%	7.8%	13.8%	-9.3%	19.6%
EBITDA growth	39.3%	32.8%	13.8%	-50.3%	34.5%
EBITDA Margin	19.4%	23.9%	23.9%	13.1%	14.7%	1.6%
Net Income Margin	7.5%	5.7%	3.9%	-16.1%	-3.7%	12.4%
CAPEX, % of revenue	51.2%	16.0%	10.7%	1.5%	0.2%	-1.2%
ROIC	6.8%	7.3%	7.2%	1.1%	4.7%	3.7%
ROE	8.8%	5.9%	4.5%	-18.1%	-5.5%	12.6%
Net Debt/EBITDA	5.9x	4.9x	4.9x	11.6x	10.0x	-1.7x

Revenue and profitability

The company's Revenue surged on 19.6% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 13.1% to 14.7% in FY2015.

Net Income marign surged on 12.4 pp from -16.1% to -3.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 0.23% in FY2015. Bombay Rayon Fashions showed big decline in CAPEX/Revenue of 15.8 pp from 16.0% in FY2012 to 0.23% in FY2015. Average CAPEX/Revenue for the last three years was 4.1%.

Return on investment

The company operates at low but positive ROIC (4.73%) and negative ROE (-5.50%). ROIC increased on 3.7 pp from 1.1% to 4.7% in FY2015. ROE jumped on 12.6 pp from -18.1% to -5.5% in FY2015.

Leverage (Debt)

Debt level is 10.0x Net Debt / EBITDA and 10.2x Debt / EBITDA. Net Debt / EBITDA dropped on 1.7x from 11.6x to 10.0x in FY2015. Debt surged on 14.8% in FY2015 while cash dropped on 13.8% in FY2015.

Appendix 1: Peers in Textiles

Below we provide Bombay Rayon Fashions benchmarking against other companies in Textiles 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
Olympia Industries ($OLYMPTX)	-99.6%	-58.0%	-96.6%	74,809.1%
Gujarat Cotex ($GUJCOTEX)		-6.2%	-66.0%	176.2%	-52.0%
T T ($TTL)	-39.2%	-21.8%	28.7%	47.8%
Filatex India ($FILATEX)	-74.3%	-2.7%	158.7%	44.5%
Gtn Textiles ($GTNTEX)	-27.7%	-8.8%	51.2%	39.4%
Median (73 companies)	-31.2%	4.8%	9.3%	14.4%	3.5%
Bombay Rayon Fashions ($BRFL)		7.8%	13.8%	-9.3%	19.6%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Ruby Mills ($RUBYMILLS)	25.2%	28.3%	25.1%	28.6%	29.3%
Vardhman Textiles ($VTL)	24.9%	13.8%	20.1%	24.3%	16.5%
Welspun India ($WELSPUNIND)	13.3%	12.2%	16.8%	22.6%	24.1%
Nitin Spinners ($NITINSPIN)	23.7%	10.5%	19.7%	19.3%	17.0%
Shri Dinesh Mills ($SHRIDINE)	24.7%	22.4%	18.5%	18.7%
Median (53 companies)	12.7%	6.3%	9.5%	9.5%	10.1%
Bombay Rayon Fashions ($BRFL)	19.4%	23.9%	23.9%	13.1%	14.7%

Top companies by CAPEX/Revenue, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jindal Worldwide ($JINDWORLD)	3.6%	3.0%	10.5%	20.7%
SRF ($SRF)	0.0%	0.0%	18.7%	20.0%	11.4%
Welspun India ($WELSPUNIND)	11.3%	5.6%	7.8%	16.4%	10.9%
Sel Manufacturing Company ($SELMCL)	54.2%	53.9%	25.1%	14.0%
Grasim Industries ($GRASIM)	7.8%	17.7%	21.7%	11.6%	10.2%
Median (20 companies)	4.5%	3.0%	5.3%	7.4%	7.2%
Bombay Rayon Fashions ($BRFL)	51.2%	16.0%	10.7%	1.5%	0.2%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Nitin Spinners ($NITINSPIN)	13.8%	6.0%	19.5%	21.5%	17.5%
Sutlej Textiles & Industries ($SUTLEJTEX)	16.0%	9.5%	13.6%	19.8%	14.6%
Vardhman Textiles ($VTL)	15.5%	6.6%	11.9%	17.3%	8.5%
Maral Overseas ($MARALOVER)		4.6%	14.1%	16.0%
Rswm ($RSWM)	17.4%	2.2%	15.2%	15.5%	11.8%
Median (126 companies)	10.1%	3.5%	9.3%	9.6%	9.7%
Bombay Rayon Fashions ($BRFL)	6.8%	7.3%	7.2%	1.1%	4.7%

Top companies by Net Debt / EBITDA

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaybharat Textiles & Real Estate ($JAYTEX)	8.4x	10.9x	53.6x	23.8x
Sree Jayalakshmi Autospin ($SREEJAYA)	3.4x		9.7x	12.8x
Sel Manufacturing Company ($SELMCL)	5.6x	9.4x	6.6x	11.5x
Ruby Mills ($RUBYMILLS)	15.9x	12.6x	15.3x	10.8x	8.6x
Prime Urban Development India ($PRIMEURB)	0.8x	4.1x		9.4x
Median (69 companies)	3.7x	3.8x	3.2x	0.0x	0.0x
Bombay Rayon Fashions ($BRFL)	5.9x	4.9x	4.9x	11.6x	10.0x

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